Note: This article is excerpted with permission from the research report ""Retreat to Advance": Research and Observation of Huimin Insurance Products: Based on the Analysis of 73 Discontinued Huimin Insurance Products", the author is the research group of Professor Xu Xian of Fudan University.
Editor's note
Some people say that under the strong guidance of local governments, medical insurance and other departments, Huimin Insurance is becoming more and more like serious illness insurance, and commercial insurance companies are limited, and in the long run, this kind of product is bound to go lonely.
Is that really the case? After careful statistics and careful combing, the report ""Retreat as Advance": Research and Observation of Huimin Insurance Products - Based on the Analysis of 73 Stopped Selling Huimin Insurance Products" pointed out that since 2015, there have indeed been as many as 73 products announced to stop selling, accounting for about 1/4 of all Huimin Insurance products. There are also insurance companies that voluntarily give up with the deepening of their understanding of the nature of their business.
After many adjustments, Huimin Insurance has not fallen, it is just more "mature".
Since 2020, Huimin Insurance products have developed rapidly and continued to iterate. As of November 15, 2023, a total of 284 Huimin Insurance products have been launched in various provinces, autonomous regions and municipalities directly under the Central Government, covering 30 provinces (municipalities and autonomous regions) across the country.
Huimin Insurance has greatly enhanced the role of commercial insurance in diversified payment, effectively reduced the medical burden of the people, and also played an active role in promoting the effective use of medical insurance data, promoting win-win cooperation in the health ecosystem, and improving residents' insurance awareness.
As the market development gradually becomes more rational and the business model continues to mature, not all Huimin Insurance products can survive in the market for a long time. As of November 15, 2023, 73 of the 284 Huimin Insurance products have stopped operating, accounting for about 25.70%. Among the discontinued products, 3 products were discontinued before formal operation, 48 products lasted for 1 period, 17 products existed for 2 periods, 4 products existed for 3 periods, and 1 product existed for more than 4 periods.
The withdrawal of some Huimin Insurance has sparked discussions in the market about whether Huimin Insurance is healthy and sustainable. This report focuses on the 73 Huimin Insurance products that are currently discontinued in mainland China, and answers the question of "how to rationally look at the current development of Huimin Insurance in mainland China" from three aspects: product feature analysis, motivation retrospection, and prudent outlook.
01
The overall growth rate of the Huimin Insurance market has slowed down, and 1/4 of the products have ceased operation since 2015
As of November 15, 2023, a total of 284 Huimin Insurance products have been launched in various provinces, autonomous regions and municipalities directly under the central government. From the perspective of time, from the launch of the first Huimin Insurance product in 2015 to the market outbreak period in 2020, the growth rate of the Huimin Insurance market has gradually slowed down, with 83 new Huimin Insurance products in 2021, 72 new Huimin Insurance products in 2022, and 27 new Huimin Insurance products from January 1, 2023 to November 15, 2023, and the market has gradually shifted from explosive growth to steady progress.
Among the 284 local Huimin Insurance products launched since 2015, 73 products have stopped running, accounting for about 25.70%, and the overall market shows the characteristics of large differences in operation.
At present, Huimin Insurance has spread to 22 provinces, 4 municipalities and 4 autonomous regions in mainland China, of which 20 provinces (autonomous regions and municipalities directly under the central government) have discontinued products, accounting for more than 60%.
The number of discontinued products in the 20 provinces (autonomous regions and municipalities directly under the central government) with discontinued products is different. Among them, Jiangsu Province has a maximum of 11 products that have been discontinued, 9 and 8 products that have been discontinued in Anhui Province and Hunan Province respectively, 5 products that have been discontinued in Fujian Province, Liaoning Province, Shandong Province and Zhejiang Province, and less than 5 products that have been discontinued in other regions.
"The number of products discontinued" does not alone judge the performance of the local Huimin Insurance market. This report further uses the discontinuation rate (number of discontinued products / total number of products) to characterize the local Huimin Insurance.
According to the data, the number of products discontinued in the eastern region is the highest at 35, but its discontinuation rate is the lowest at 32.9%. The Huimin Insurance market in these areas developed early, the number of products is large, and the update and iteration speed is fast, which shows the self-optimization and upgrading of the market to a certain extent to adapt to market demand and policy orientation.
The overall level of product planning has affected the operational performance to a certain extent. The overall planning level of the 73 products that were discontinued showed that the average suspension rate of urban customized products was 50.61%, and the average suspension rate of provincial overall planning products was 20.83%. The higher the overall level, the more potential insured people are faced, which is more conducive to the overall development of the product to a certain extent.
It is worth noting that the duration of each product shows that 3 products will be discontinued before formal operation, 48 products will be in existence for 1 period, 17 products will be in existence for 2 periods, 4 products will be in existence for 3 periods, and 1 product will be in existence for more than 4 periods. In terms of region, the operation time of discontinued products in each region is concentrated in 1~2 cycles, with small differences, and only some products in Anhui, Fujian, Guangdong, and Jiangsu have more than 2 cycles.
The time to launch of the product affects the operational performance of the product. In 2020, the market is in its infancy, and the pricing and operational strategies of products still need to be explored. Data shows that more than half of the products launched in 2020 are out of sale. At present, the operational performance of the late-stage online products is relatively good, but due to the short operation time, the operational performance needs to be continuously observed. Launch time also affects the product lifecycle. Among the products in the first phase of operation, 68.75%, 22.92% and 8.33% were launched in 2020, 2021 and 2022, respectively.
The involvement of the government extends the operating cycle of the product. Among the 73 discontinued products, 72.6% of the products announced the participating government departments, and 27.40% of the products did not have the participation of government departments. Government involvement has a significant impact on the product life cycle.
The data show that in the case of government participation, the proportions of 0, 1, 2, 3 and multiple periods are 0, 62.26%, 28.30%, 7.55% and 1.89%, respectively. In the absence of government involvement, the proportion of 0, 1 and 2 periods is 15%, 75% and 10% respectively. In other words, the increase in the number of products with 2 or more phases under the guidance of the government, and the discontinuation of products with 2 or more phases of operation is mainly due to the replacement of new products under the guidance of the government.
There are fewer products in the co-underwriting model among the end-of-sale products, and the duration performance is better. The average duration of discontinued products shows that the average duration of products underwritten by a single company is 1.52 years, among which the long operation cycle of Shenzhen Supplementary Medical Insurance for Serious Diseases has increased the average duration of the products. After excluding the supplementary medical insurance for major illnesses in Shenzhen, the average duration of a single company's underwriting products (1.33 years) is smaller than that of co-insured products (1.41 years).
The report separately counts the exits of property insurance companies, life insurance companies, pension insurance companies, health insurance companies and agricultural insurance companies. Overall, the discontinued products involved 30 property insurance companies, 12 life insurance companies, 3 pension insurance companies, 2 health insurance companies and 3 agricultural insurance companies. Among them, Ping An insurance companies, especially Ping An Pension, withdrew from the market after the rapid layout in the early stage, and there were many products that were discontinued.
Brokerage companies and health management companies have driven the optimization of Huimin Insurance's sales and operations. According to the data, there are 39 products without the participation of brokerage companies and 34 products with brokerage companies. There were 45 products without the participation of a health management company and 28 products with a health management company.
02
The main factors for the delisting of policy-based products: the withdrawal of pension insurance companies, the merger and operation of multiple products under the overall planning of the province, and the self-adjustment of insurance companies
In November 2023, the State Administration of Financial Supervision and Administration issued the Interim Measures for the Supervision and Administration of Pension Insurance Companies, prohibiting pension insurance companies from operating short-term health insurance business, and clarifying that pension insurance companies whose business scope exceeds the provisions shall complete the change within three years. The short-term health insurance business of pension insurance companies will need to be significantly reduced until it is cleared.
As a one-year health insurance product, after the policy was issued, pension insurance companies such as Ping An Pension, Taikang Pension and Dajia Pension adjusted their business layout, stopped selling the separately underwritten Huimin Insurance project, and withdrew from the jointly underwritten Huimin Insurance project.
Business direction - take the path of professional development and focus on the main business of the pension industry.
Pension insurance companies should take the path of professional development, actively participate in the construction of a multi-level and multi-pillar pension insurance system, focus on the main business of pension, and innovate pension financial products and services.
Business direction - pension-related business, including pension insurance, commercial pension, etc
Pension insurance companies shall mainly engage in pension-related business, including pension insurance, commercial pensions, etc., and shall not be entrusted with the management of insurance funds and the development of insurance asset management products.
Specific business - five types of business, excluding short-term medical insurance products such as Huimin Insurance
Pension insurance companies can apply to operate some or all of the five types of business: first, annuity insurance, life insurance, long-term health insurance, and accident insurance with pension attributes; the second is commercial pension; the third is pension fund management; fourth, the use of insurance funds; Fifth, other businesses approved by the insurance regulatory authority of the State Council.
In addition to regulatory policy reasons, the consolidation of local Huimin Insurance products by many local governments has also led to the cessation of operation of some products.
With the gradual maturity of Huimin Insurance's operation, Anhui, Fujian, Hunan, Henan, Heilongjiang and other places have combined the operation of a number of Huimin Insurance products at the request of the government to reduce disorderly competition in the market and integrate potential insured people. Taking Anhui as an example, Anhui Province has launched a total of 10 Huimin Insurance products since 2020, and all products will be merged into the "Anhui Huimin Insurance" coordinated by the provincial level in 2024, resulting in an overall suspension rate of 90%.
The sales suspension rate in Anhui is 90%, and in 2024, all products will be merged into the provincial overall "Anhui Huimin Insurance" and will be operated at the provincial level.
From the perspective of municipal-level overall products, the competition and operational performance of multiple products in the same region depend on the potential local market capacity, such as the level of local insurance development, the number of population, residents' insurance awareness and the degree of government support.
The report cites the 2023 list of China's top 100 cities released by Gybrand, and finds that the average suspension rate of Huimin Insurance in first-tier cities is 15%, the average suspension rate of Huimin Insurance in quasi-first-tier cities is 38%, the average suspension rate of Huimin Insurance in second-tier cities is 43%, and the average suspension rate of Huimin Insurance in third-tier cities and below is 47%.
Products with different overall planning levels usually face two situations: when the protection level and rate of the two are quite different, consumers are more likely to make choices based on the protection level and rate, so the products with low overall planning level should be optimized in terms of protection responsibility, value-added services and rates, so as to improve consumers' sense of gain, so as to expand their competitive advantage; For products with a small difference between the level of protection and the rate, consumers have less room to choose, and products with a high overall level are easy to gain an advantage in the competition because they face more potential consumer groups.
In the early stage of market development, all participants are still exploring product design and operation, and consumers' recognition of products needs to be improved. As the market matures, Huimin Insurance will show better performance. The data shows that the product discontinuation rate exceeded 50% in 2020, while the discontinuation rate continued to decline in 2021 and 2022. In terms of duration, 64.71% of the products launched in 2020 are in phase 1. From the perspective of the product launch time of Phase 1, the highest proportion of products launched in 2020 is 68.75%.
Market choice is also one of the main factors for the large number of Huimin Insurance products to stop operating. In the process of market development, each participant takes the initiative to iterate on products to meet market demand.
Taking Dongguan as an example, under the guidance of the government, PICC P&C Insurance has removed Dongguan Civil Insurance, which has been in operation for two cycles, and launched two new products, Guan Jiafu and Guan Kang Wuwu, to undertake and iterate. Both new products exhibit clear differentiation in terms of rates and responsibilities to meet the needs of different consumers.
03
To break the dilemma of Huimin Insurance, the product must take into account both commercial attributes and inclusive attributes
Huimin Insurance is an excellent model of inclusive insurance in mainland China, and the regulator attaches great importance to the standardized and sustainable development of Huimin Insurance. In June 2021, the former China Banking and Insurance Regulatory Commission regulated the market chaos in the early stage of the development of Huimin Insurance. In January 2024, the State Administration of Financial Supervision issued the Notice on the Smooth and Orderly Development of Urban Customized Commercial Medical Insurance (Draft for Comments), which put forward expectations and requirements for Huimin Insurance. It is undeniable that Huimin Insurance is an excellent model for the construction of inclusive finance in the mainland, and there is still a lot to be done in the future under the principle of adhering to norms and sustainable business philosophy.
2021.06
Former China Banking and Insurance Regulatory Commission
The early stage of the development of Huimin Insurance
"Giving full play to the role of the market to serve people's livelihood protection"
"Adhere to steady operation and provide professional services"
"Consolidate the main responsibility and standardize business behavior"
2023.10
Central Financial Work Conference
"Unswervingly follow the path of financial development with Chinese characteristics"
"Promoting the high-quality development of mainland finance"
"Do a good job in science and technology finance, green finance, inclusive finance, pension finance, and digital finance"
2024.01
State Administration of Finance
"Respect for the business attributes of commercial insurance"
"Encourage long-term medical insurance designed as a rate-adjustable"
"Customized medical insurance business in the form of co-insurance"
"No apportionment of insurance task indicators to the grassroots"
Product positioning: Commercial insurance takes into account the inclusive attributes
The policy requires that customized medical insurance should adhere to market operation and government guidance, give full play to the decisive role of the market in the allocation of resources, better play the role of government departments in supporting and guiding business development, respect the business attributes of commercial insurance, and adhere to the independent operation of insurance companies, self-financing, and voluntary insurance for the people.
However, there has been a consensus on the important role of government involvement in the survival and operation of the product, and the trust in the government is also an important reason for consumers to buy Huimin Insurance. After guiding the local Huimin Insurance to standardize its operation, government departments need to explore more diversified cooperation models and promote the role of commercial insurance as a diversified payer.
At the same time, commercial insurance companies and market participants should take Huimin Insurance as an opportunity to explore and develop more innovative cooperation channels under the premise of following the attributes of Huimin Insurance's commercial inclusive insurance.
Product design: Establish consumer demand-oriented thinking
Consumer demand orientation involves multiple aspects such as data disclosure, product pricing, and operations. In terms of data disclosure, 67% of the 73 Huimin Insurance products that have been discontinued have not issued a stop announcement and follow-up information, which is easy to cause consumers to worry about the iterative stability of the entire Huimin Insurance market, and companies should release relevant information in a timely manner to ensure information transparency. In terms of product pricing, we pay attention to consumers' price sensitivity and protection needs, and determine a reasonable price range through market research to meet the willingness of different consumers to pay.
Professor Xu Xian's team at Fudan University found that 87.65% of consumers are willing to pay extra for product upgrades. In product design and operation, we should pay attention to the pain points of different age groups, establish hierarchical solutions, meet the differentiated needs of each age group, and improve product competitiveness.
The tiered solution of value-added services focuses on the pain points of people of all ages
• Chronic disease management for the elderly, rehabilitation nursing, health care tracking, offline consultation services, medical assistance services, medical escort services, drug delivery services, care services, etc
• Middle-aged people Disease screening, health consultation, physical examination services, examination report interpretation, triage services, medication management services, life services, etc
• Online consultation for teenagers, oral and dental ophthalmology and psychological services, preferential discount services, etc
Product Operation: Ensure product operation optimization and compliance
It is of great significance to accelerate the speed of insurance claims through technology, optimize product pricing through data, and extend customer stickiness by relying on active renewal and other solutions to extend customer stickiness in the current sustainable development of Huimin Insurance.
01Technology empowerment
Explore and carry out convenient service measures such as basic medical insurance identity verification and online rapid claim settlement to improve the satisfaction of the people.
02Data utilization
Provide part of the basic medical insurance summary statistics to the participating insurance companies for the purpose of determining insurance liabilities and determining insurance rates.
03Sales specifications
Coordinate third-party sales platforms such as WeChat and Alipay, as well as communication platforms such as government websites, bus stations, and social media, and establish options such as active insurance renewal, so as to promote the sustainable development of Huimin Insurance.
A collection of relevant reports and views of the research group
• Xu Xian, Wang Guangzhi, Chen Ge. Shanghai Improves the Diversified System of Commercial Insurance to Support the Development of Biomedical Pilot Industry [J]. Shanghai Insurance, 2024, (03): 11-17.
• Xu Xian. Adhere to the purpose of "more inclusive" and explore ten iterative directions: Interpretation of the Knowledge Graph of Urban Customized Commercial Medical Insurance (Huimin Insurance) in 2023 [J]. Shanghai Insurance, 2023, (12): 12-18.
• Xu Xian. The Second Anniversary of Shanghai Huibao: Moving Forward with Fluctuations and Maintaining the Original Intention [J]. Shanghai Insurance, 2023, (05): 11-14.
• Xu Xian. Exploration and development to maturity Huimin Insurance helps the improvement and development of multi-level medical security system——Interpretation of the knowledge graph of urban customized commercial medical insurance (Huimin Insurance) in 2022 [J].Shanghai Insurance, 2022, (12): 12-14.
• Xu Xian. Shanghai Huibao Annual Examination: The Effect of Benefiting the People and Upgrading and Expansion [J]. Shanghai Insurance, 2022, (05): 5-8.
• Xu Xian. Three stages of Huimin Insurance and tripartite win-win [J]. CHINESE HEALTH JOURNAL, 2021, (09): 26-28.
• Xu Xian. The past, present and future of Huimin Insurance [J]. Shanghai Insurance, 2021, (05): 13-20.
• Xu Xian. Huimin Insurance Promotes the Modernization of Government Governance Capacity at the Medical Security Level [J]. Shanghai Insurance, 2021, (02): 9-11.
• XU Xian, LUO Jingwen, WANG Jiaxin, et al. Application of Inclusive Insurance in Health Management: An In-depth Analysis Based on Huimin Insurance [J]. Insurance - Theory & Practice, 2020, (12): 22-34.
• Jointly released the industry white paper "Huimin Insurance's Past Life, Present Life and Future-—— "Huimin Insurance" 2020 Summary and 2021 Outlook, 2021.
• United Good Clinic released the industry development report "Application of Inclusive Insurance in Health Management - Based on the In-depth Analysis of Huimin Insurance", 2020.
• Ten Questions and Ten Answers on the Healthy Development of Huimin Insurance, 2023.
• Released the Knowledge Graph of Urban Customized Commercial Medical Insurance (Huimin Insurance), 2021-2023.