A study released by Swiss Re shows that 72 per cent of Chinese plan to purchase insurance in the next year. The main reasons for this is the growing awareness of risk and a rising need to supplement basic social security protection
Recent accidents, such as the July 23 train crash in Wenzhou, Zhejiang province and a string of malfunctions on bullet trains, will add to this awareness.
“This accident will definitely boost people’s risk awareness and increase the demand for life and accident insurance,” said Xing Li, an economist with Swiss Re.
Industry sources said that passengers who purchase accident insurance before embarking on a bullet train has jumped by 50 per cent since the accident in Wenzhou, where a high-speed train crashed into another, killing 40 people and injuring 191.
Though a number of life insurers, including China Life, Ping An, China Pacific Life Insurance and Sunshine Life Insurance, have accelerated the claims process for people insured during the crash, the payment is estimated to have been around 3 million yuan ($465,900) by July 29, indicating a low ratio of penetration and coverage.
However, that ratio could gradually change, according to Swiss Re’s survey in April and May of 13,800 consumers aged 20 to 40 across major cities of 11 Asia-Pacific markets.
The survey sought to identify any changes in consumer risk attitudes compared with the results of a first study conducted during the global financial crisis in 2009, as measured by the Swiss Re Consumer Appetite for Risk Index (CAFRI).
According to the survey, 20- to 40-year-olds on the Chinese mainland have become less willing to take risks in the past two years, with the CAFRI value dropping from 2009 to 2011. The Chinese mainland ranks eighth in the CAFRI table, below Hong Kong (second) and Taiwan (sixth). Seventy-two per cent of respondents are planning to buy life and health insurance products in the next 12 months, one of the highest percentages in the Asia-Pacific region.
“For the insurance industry, 20- to 40-year-olds are not only the future buyers of insurance, they also represent tremendous business opportunities now,” Xing said.
According to the survey, 20- to 40-year-olds in some major cities on the Chinese mainland have become less willing to take risks in the four measured categories: health, finance, career and lifestyle. This growing across-the-board conservatism may be fuelled by the increasing need to supplement social security measures or “safety nets” for people to fall back on in emergencies.
The survey found people in China better prepared for their financial future than their Asia-Pacific peers. Still, around 30 per cent of respondents – as opposed to the regional average of about 40 per cent – said their families would or might struggle financially in the event of early death, major serious illness or disability, and the most important reason was inadequate social security.
In addition, more than a half (54 per cent) of respondents were concerned about the amount of out-of-pocket medical expenses in cases of serious illness, the survey showed.
Source : China Daily
