Original Title: Life Insurance Company’s Premium Income Goes High, Opens Down, Goes Down
Our reporter Leng Cuihua
The positive year-on-year increase in annual premiums of life insurance companies for 9 years may be broken.
The time has passed until the beginning of December 2021, and soon all insurance companies will hand over the “answer sheet” of annual premiums. According to the latest statistics, in the first 10 months of this year, life insurance companies reduced their premiums by 44.8 billion yuan compared with the same period last year. Industry insiders believe that, combined with the trend of premiums this year and the analysis of the industry’s internal and external environments, the year-on-year growth rate of premiums for life insurance companies this year is likely to be negative.
“Buzzer-turned” premiums may hardly reappear
According to the latest statistics from the China Banking and Insurance Regulatory Commission, in the first 10 months of this year, life insurance companies received a total of 2.7654 billion yuan in original insurance premium income, a decrease of 44.8 billion yuan from the same period last year, a year-on-year decrease of 1.59%. From the perspective of insurance types, life insurance and accident insurance of life insurance companies fell 2.1% and 7.75% year-on-year, respectively. Only health insurance barely maintained positive growth (up 0.75% year-on-year). However, it is worth noting that the monthly premiums of health insurance in September and October “dipped” rapidly.
From the perspective of the insurance premium income of life insurance companies during the year, the overall trend is “opening higher and lowering lower”. In the first quarter, the second quarter and the third quarter, the premium income was approximately 1,418.6 billion yuan, 557 billion yuan and 627.6 billion yuan, an increase of 8.34 year-on-year respectively. %, -18.98% and -2.38%.
Can the annual premiums of life insurance companies “turn positive” by relying on the substantial increase in premiums in the last two months of the year? Zhou Jin, a partner of PwC China’s financial industry management consulting, said in an interview with a reporter from “Securities Daily” that the possibility is unlikely. Since the beginning of this year, life insurance companies have encountered common challenges from internal and external factors, and these challenges will not change much in the short term. At the same time, from the perspective of time, life insurance companies lacked motivation to impact annual premiums in the last two months. Therefore, it is expected that this year’s annual premiums of life insurance companies will show a negative growth year-on-year.
Guo Zhenhua, a professor in the Insurance Department of the School of Finance of Shanghai University of International Business and Economics, holds a similar view. There are three reasons for the high probability of a year-on-year negative growth in annual premiums of life insurance companies this year: first, the external macroeconomic environment has not improved significantly, and the epidemic continues to repeat; second, the sales team of life insurance companies The number has not shown a significant increase in the decline; thirdly, there are no products with strong competitiveness in the market for the time being. In addition, the current focus of life insurance companies is to promote a good start next year, and most of the insurance premiums are included in next year. If we look closely at the premium structure of life insurance companies, the year-on-year drop in new policy premiums this year may be even more pronounced than the drop in total premiums.
If this year’s life insurance company’s annual premiums are unable to “maintain” year-on-year, this means that their year-on-year positive growth in annual premiums for 9 years will be broken. According to statistics published by the China Banking and Insurance Regulatory Commission, from 2012 to 2020, the original insurance premiums of life insurance companies have achieved positive year-on-year growth. This is due to the increase in the number of insurance companies, but it is mainly affected by the continuous growth of insurance companies. The industry generally believes that this year’s premium “buzzer turn positive” phenomenon may be difficult to reproduce.
Next year the pressure will still be greater
Why is it so difficult for life insurance companies to develop in 2021? Will the day be better in 2022? Industry insiders believe that from the perspective of external factors, the main unfavorable factors faced by life insurance companies are the relatively sluggish macro economy, repeated epidemics that have increased the uncertainty of residents’ income expectations, and the weakening of residents’ insurance purchase willingness and ability to pay. From the perspective of internal factors, The extensive development of the life insurance industry in our country has been problematic for many years. The above-mentioned problems are not formed in the short term, and it is even impossible to solve them overnight. Therefore, it is expected that life insurance companies will still face greater development pressure in 2022.
From the perspective of the industry’s own development, many people in the industry said that the critical illness insurance that has supported the rapid development of life insurance companies in my country in the past few years has encountered “big problems”: The complication of the company has led to difficulties in its secondary sales; the second is the over-marketing overdraft market before the update of the definition of “critical illness” this year, and it will take longer to accept the new definition.
Guo Zhenhua said that in the past, life insurance companies have long used additional staff to increase customers and expand the market. However, this year, insurance companies have not only failed to increase staff, but a large number of insurance agents have been lost. At the same time, the mismatch of supply and demand in the life insurance market is still serious, and there is still a large gap between the strength of the marketing team and the market demand, so the order issuance rate is low. From the perspective of property insurance, due to factors such as continued decline in interest rates, its income attractiveness has also weakened.
Zhou Jin analyzed that the core problem facing life insurance companies is that the extensive development model that has lasted for many years is unsustainable, and that relying on the crowd tactics to drive sales has failed. At the same time, some insurance companies are eager to carry out certain businesses without the corresponding capabilities. Multiple factors are intertwined, making life insurance companies face a particularly difficult situation this year.
“Internal problems did not appear this year, but a process of quantitative change to qualitative change. These problems are difficult to change in a short period of time.” Zhou Jin said, therefore, the development of life insurance companies in 2022 will still face greater challenges and continue to change. Pay close attention to core capacity building.
Looking forward to 2022, Guo Zhenhua believes that although life insurance companies will still face greater challenges in their development next year, as their strategies to deal with adverse environments become more mature and their transformations are intensified, their performance may improve compared to this year.
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