The Chinese life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 9.0% over 2024–28, from CNY4.0 trillion ($597.1 billion) in 2024 to CNY5.6 trillion ($893.2 billion) in 2028, in terms of direct written premiums (DWP), according to GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, China’s life insurance industry is estimated to grow by 9.6% in 2024, supported by economic recovery, conducive regulatory developments, and increased awareness of health and financial planning after the pandemic, which led to a rise in the demand for whole life and personal accident and health (PA&H) insurance policies.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “After witnessing a slower growth of 2.8% in 2022, the Chinese life insurance industry is expected to witness a double-digit growth of 13.7% in 2023, driven by economic recovery and the relaxation of the zero COVID policy in December 2022, which has helped in increasing the employment rate and household disposable income.”

Whole life insurance is the largest life insurance line, which is expected to account for 78.3% share of the life insurance DWP in 2023. The demand for whole life insurance is driven by the country’s demographic factors, such as an aging society and a high life expectancy. According to GlobalData’s Macroeconomic Database, the population above 65 years old increased to 191.6 million in 2022 from 184.6 million in 2021 and is forecast to reach 248.4 million in 2030.

A growing population of high-net-worth individuals (HNWIs) will also support whole life insurance growth in China. China’s affluent segment (including HNW and mass affluent individuals) has experienced steady growth in recent years, recording an average annual growth rate (AAGR) of 9.8% over 2018–22. Life insurance is an important tool for this segment as it helps in financial protection from life-threatening events and diseases as well as inheritance planning. Whole life insurance is expected to grow at a CAGR of 10.0% during 2024-28.

PA&H insurance is the second largest line, which is estimated to account for 21.4% share of the life insurance DWP in 2023. PA&H insurance is expected to grow at a CAGR of 4.8% during 2024-28, supported by increasing health awareness post-pandemic and a super-aged population, emphasizing the need for protection from health hazards.

Vangari adds: “Rising health insurance premiums due to an increase in the medical inflation rate will also support PA&H insurance growth. A higher rate of acute diseases, a rapidly aging population, and strong healthcare utilization are leading to an increase in healthcare premiums in China. Additionally, government initiatives aimed at extending health insurance benefits to a larger population will also aid PA&H insurance growth.”

In July 2023, the National Administration of Financial Regulation issued a notice on expanding personal income tax incentives to more classes of commercial health insurance plans such as medical insurance, long-term care insurance (LTC), and disease insurance offered by life insurers. In November 2022, the government also launched a pilot phase of individual private pension scheme in 36 cities, as part of the third pillar of the pension system. The third pension pillar allows individuals to invest up to CNY12,000 ($1,872) in certain pension products, including commercial endowment insurance.

Universal life and endowment insurance products collectively account for the remaining 0.3% share of life insurance DWP in 2023.

Vangari concludes: “China is projected to become a super-aging society by 2030, which will continue to create the demand for life insurance products. A growing affluent population, increasing awareness of health and financial protection, and positive regulatory developments will support life insurance growth in the country over the next five years.”