Recently, the State Administration of Financial Supervision and the National Health Insurance Administration jointly drafted the "Notice on the Smooth and Orderly Development of Urban Customized Commercial Medical Insurance (Draft for Comments)", and solicited opinions from various localities. The Consultation Paper clarifies that Huimin Insurance should be positioned as an individual insurance product, and proposes that insurance companies can apply for the use of local medical insurance data as needed.
After three years of rapid progress, Huimin Insurance has launched a total of 263 products, and the total number of insured people has reached 29.8 billion, and the premium scale in 2022 will reach 12.4 billion yuan (Fudan University), but at the same time, Huimin Insurance is also facing problems such as declining insurance rates, increasing loss ratios, and serious adverse selection. This is the first time that the two departments have jointly regulated Huimin Insurance, which is of decisive significance for the future of Huimin Insurance.
The Elephant in the Room: Policy Insurance or Commercial Insurance?
Although it is classified as a commercial health insurance product, Huimin Insurance has a strong policy insurance color since its birth. In 2015, the former Shenzhen Municipal Bureau of Human Resources and Social Security issued the "Trial Measures for Supplementary Medical Insurance for Serious and Serious Diseases in Shenzhen", and launched the supplementary medical insurance for major and extraordinarily serious diseases in Shenzhen to supplement the losses of major diseases of the local medical insurance participants. In this measure, Shenzhen has launched a number of pioneering policies such as medical insurance account deduction, default insurance, and agreed loss ratio, which has also become the reference blueprint for many of the leading Huimin Insurance products in the future.
With the strong support of the first company, the number of people insured by supplementary medical insurance for serious diseases in Shenzhen has expanded rapidly, reaching 4.86 million in 2015, exceeding 5 million in the second year, and reaching 7.96 million in 2021, accounting for 48% of the local basic medical insurance participants.
In contrast to the "Huimin Insurance" in Shenzhen, which is in full swing, there are few applicants for this business nationwide, and in the four years from 2015 to 2019, only Nanjing, Zhuhai, Guangzhou, and Hainan have launched Huimin Insurance products, which have failed to form a prairie fire. Since 2020, property insurance companies under pressure from the comprehensive reform of auto insurance have chosen short-term health insurance as a breakthrough in business growth, coupled with the increased attention of residents to health care under the influence of the epidemic, Huimin Insurance has taken advantage of the momentum, with 97 Huimin Insurance products launched in 2020 and a total of 257 products launched in 2022.
*: Fudan University's "Huimin Insurance 2023 Knowledge Graph".
At the same time, Huimin Insurance has shown some common characteristics, and due to the characteristics of "one city, one policy" of Huimin Insurance products, affected by different policy environments, economic levels and regional cultures, the types of Huimin Insurance products have also begun to differentiate.
Different from long-term medical insurance and million medical insurance, Huimin Insurance is positioned to compensate for the expenditure of major diseases, and has a strong inclusive attribute at the beginning of its birth, with the characteristics of low **, low threshold and high insurance amount. In terms of the amount insured, the amount of Huimin Insurance products is rising year by year, and the proportion of Huimin Insurance products with an insurance amount of more than 2 million in 2022 will account for more than 80%.
Figure: Distribution of the insured amount of Huimin Insurance products. **Hunan University, "Blue Book of Huimin Insurance Product Research".
In addition to these commonalities, the degree of support and participation has become the most important factor in promoting the differentiation of Huimin Insurance products. Judging from the various support policies currently known, the support from large to small includes: **mandatory promotion and inclusion in the performance appraisal of subordinate institutions, ** document support, product development data support, open medical insurance account payment, support system docking and settlement, **department attendance at the press conference, **department naming, etc. Localities** often use one or more of the above methods to support.
On the other side of strong support, it also improves the inclusive attributes of Huimin Insurance by participating in the setting, coverage of insurance, deductibles, and agreed loss ratios, etc., and some places explicitly use it as a policy tool to promote common prosperity.
Figure: The five types of Huimin Insurance. **National Finance and Development Laboratory, "Where is the Huimin Insurance Model Going".
For the most weak governance or purely commercial products, although more "freedom" has been obtained in pricing, compensation and other links, due to the unified pricing of Huimin Insurance products, the compensation end is inclined to the sick body, resulting in the gradual launch of healthy people and the deterioration of the underwriting age structure, which has to cope with the rising compensation costs and marketing costs by raising prices, which further leads to the withdrawal of healthy groups and sub-healthy groups, forming a "death spiral".
According to the research of Hunan University, the most strongly guided Huimin Insurance products have a higher insurance rate, a healthier age structure, and a more stable operation, while the more commercial Huimin Insurance faces greater challenges in sustainability. Taking Zhejiang Huimin Insurance series products as an example, the participation rate of many products, including Zhejiang Libao, Huiqubao and Yuehuibao, exceeds 60% (Hunan University), and the average age of the insured is less than 50 years old, and it has been online for more than 2 periods. In contrast, the commercial Huimin Insurance faces the problems of low insurance rate, adverse selection of policyholders and poor sustainability.
Figure: Comparison of the participation rate of some Huimin Insurance. **Hunan University, "Blue Book of Huimin Insurance Product Research (2022)".
The supply of "policy" is insufficient
Behind the differentiation of Huimin Insurance's business performance, it is essentially that as a policy type of insurance, it has not received sufficient policy support. From the perspective of the first level, the original intention of promoting Huimin Insurance is to make up for the shortcomings of basic medical insurance and serious illness insurance, and enhance the ability of residents to resist risks in the face of major diseases.
From the perspective of the coverage of Huimin Insurance, among the 211 products in continuous operation, 170 are municipal-level co-ordinated products, accounting for 81%, and 41 provincial-level co-ordinated products, accounting for 19%. The main ones that have issued documents to regulate Huimin Insurance products are local governments, and ministries and commissions have few voices.
As Huimin Insurance gradually grew into an "elephant in the room", regulators had to step in to set boundaries and frameworks for it. In February 2021, the former China Banking and Insurance Regulatory Commission (CBIRC) issued the Notice on Issues Concerning the Regulation of Short-term Health Insurance Business, pointing out that the rapid development of short-term health insurance is accompanied by problems such as weak pricing foundation, arbitrary suspension of sales, and irregular underwriting and claim settlement.
In June, the former China Banking and Insurance Regulatory Commission issued the "Notice on Regulating the Urban Customized Commercial Medical Insurance Business of Insurance Companies", positioning Huimin Insurance as "urban customized commercial medical insurance", requiring Huimin Insurance to "follow the rules of commercial health insurance operation", and requiring insurance companies to "conduct a prudent assessment of the customized medical insurance business and carry out product retrospective work in strict accordance with relevant requirements".
The embarrassing thing is that although the insurance regulator is aware of the risks and problems faced by the pure commercial operation of Huimin Insurance, due to the large differences in local attitudes and the different quality of medical insurance data, Huimin Insurance still has not been able to obtain sufficient policy support, especially the support of medical insurance data resources.
At present, most commercial Huimin Insurance product development cannot obtain medical insurance data support, and can only be optimized through iteration, and there are great differences in population structure and disease structure in different regions, which leads to the development of many commercial Huimin Insurance products is tantamount to "opening a blind box", and the operation can only take one step at a time.
In addition, the critical illness covered by Huimin Insurance has a long cycle, and it often takes 2-3 years from the onset of the disease, ** to reporting the case and settling claims, resulting in the long-tail characteristics of the Huimin Insurance business, which further increases the operational risk of the Huimin Insurance business.
In January 2022, the former China Banking and Insurance Regulatory Commission (CBIRC) once again issued the "Report on Issues and Suggestions on the Development of China's Commercial Health Insurance", pointing out that "urban customized medical insurance projects are prone to losses due to the unsustainability of the projects due to the adverse selection of the insured." According to the "Huimin Insurance 2023 Knowledge Graph" released by Fudan University, among the 284 products launched since 2015, 73 products have been withdrawn from the market, accounting for 25%. Among the 211 products in normal operation, the number of more than 3 phases (including this number) is 96, accounting for less than 50%. The long-term sustainable operation of Huimin Insurance is facing great challenges.
The interweaving and rebalancing of multiple interests
In addition to the medical insurance department, insurance regulators and insurance companies, third-party service providers such as brokerage companies and health management companies have gradually become an indispensable part of the operation of Huimin Insurance. At the same time as the rapid development of Huimin Insurance, the multi-party interest game also determines the policy trend of Huimin Insurance to a certain extent.
Data**: National Health Insurance Administration.
For the local ** and medical insurance departments, it is hoped that Huimin Insurance will expand the scope of protection, reduce the deductible, give more play to the supplementary protection function of serious illness insurance, reduce the pressure of medical insurance payment, and improve the level of medical security for low-income people while maintaining a low **, low threshold and high insurance amount. In fact, some regions have used Huimin Insurance as a policy tool to adjust the income distribution structure, prevent people from falling back into poverty due to illness, and promote common prosperity. According to the data released by the National Health Insurance Administration, there is an obvious imbalance between China's employee medical insurance and residents' medical insurance protection - the proportion of employee medical insurance expenditure is low and the level of protection is high, while the proportion of residents' medical insurance expenditure is high and the level of protection is low, and the difference between the two protection levels reaches 16 percentage points.
For the insurance regulatory authorities, although the promotion of Huimin Insurance has enhanced the insurance awareness of the masses and highlighted the social value of insurance, how to resolve potential risks and promote the healthy and sustainable development of Huimin Insurance is a more urgent issue under the shadow of the weak pricing foundation, low renewal rate and deterioration of the age structure of most Huimin Insurance.
On the one hand, they hope to alleviate the downward pressure on the growth rate of scale through the promotion of Huimin Insurance, and on the other hand, they need to carefully balance the relationship with the first - they hope to win more support, but they do not want to interfere too much in product design and claims in order to leave more room for profit.
For third-party service companies, in the face of fierce market competition and uncertain policy prospects, coupled with the fact that they do not need to bear the risk of subsequent compensation, they are more likely to adopt a short-term behavior: they hope to quickly expand their market share and cut as much as possible in the cake of Huimin Insurance. According to the data disclosed by Yuanxin Vibro, the insurance services it provides in the Huimin Insurance business cover claims, product development, drug benefit management, marketing, etc., and it charges a fixed fee or a fixed percentage fee according to the number of policies or premiums.
Development direction: The strengthening of policy insurance positioning will reduce operational risks
At present, the biggest dilemma faced by Huimin Insurance is the risk of insufficient policy support - due to the lack of national policy guidance and support, many insurance companies have to use the business mode of commercial insurance to operate a policy-based insurance.
It is worth noting that the regulators seem to be aware of this problem, and the draft drafted by the two departments did not issue to insurance companies in accordance with the usual practice, but directly solicited opinions from local governments, and the most noteworthy of them is that local medical insurance departments can provide medical insurance statistics to insurance companies for insurance liability determination and product development under the premise of meeting certain conditions.
If the content of the Consultation Paper is realized, it can greatly reduce the concerns of local governments to support Huimin Insurance projects, and promote the business model of Huimin Insurance to tilt in the direction of policy insurance. At the same time, with the intervention of the local government, the operating threshold of Huimin Insurance business will be further improved, and the loss ratio, deductible and coverage of Huimin Insurance products will reflect more of the will.
With the deepening of participation, there will be more and more strong guidance Huimin Insurance in the market, and the overall business stability and sustainability of Huimin Insurance products will be enhanced, and its function as a policy tool will be further strengthened. For the commercial operation of Huimin Insurance products, due to the squeeze of policy-based Huimin Insurance, coupled with the unbreakable distortion between its business model and product characteristics, it will face the test of life and death if it does not transform or withdraw.
Pat the smell of fireworks around you