Coronavirus outbreak can drive private health insurance adoption in China, says GlobalData

Following the news that Wuhan coronavirus has now become a full-scale public health crisis;

Tapas Bhowmik, Insurance Analyst at GlobalData, a leading data and analytics company, offers his view on China’s health insurance landscape:

“Private health insurance adoption has traditionally been very low in China due to the presence of public insurance system, which covers almost 97% of the population. According to GlobalData, the direct written premium of private health insurance in China is estimated at CNY618.7bn (US$90.6bn) in 2019. This is mainly driven by retail segment, which accounts for more than 80% of total premium.

“Private health insurance penetration, calculated as total premium divided by GDP, in China is very low at 0.6% in 2019, almost one-third of Switzerland. It is lower when compared to Asian countries such as Australia and Singapore, where it is 1.24% and 1.13%, respectively.

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“Rising income levels and aging population are driving the demand for better and high quality healthcare services in China. The public healthcare system only provides limited cost coverage, forcing people to purchase private health insurance to cover the additional cost involved.

“In the present context of coronavirus outbreak, the extent of insurance coverage is yet to be confirmed. This is partly due to the National Health Commission categorizing coronavirus as a Class B infectious disease. Most of the private insurers do not provide cover for Class B infectious diseases. However, some insurers suspended the restrictive clauses and are sharing part of the cost burden as goodwill and social responsibility. The current health crisis is expected to accelerate shift in consumer attitude towards private health insurance. Increased number of people is expected now to look to purchase private health insurance to complement their existing public health insurance. This presents a significant growth opportunity for private health insurers in China.”

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