China's personal insurance sector to grow 5% to 10% annually

Pension and health products are expected to account for 50% of the market by 2035.

China’s personal insurance sector is projected to grow by 5% to 10% annually, reaching between $910b (RMB6.6t) and $1.74t (RMB12.6t) by 2035, up from $550b (RMB4t) in 2021, according to Boston Consulting Group (BCG).

Growth will be driven by the ageing population, rising interest in health and wellness, and increasing demand for pension and health insurance products, which are expected to account for 50% of the market by 2035.

The product mix is expected to shift significantly. 

Currently, life insurance dominates with 72% of the market, followed by health insurance at 27% and pension insurance at 1%. 

By 2035, life insurance’s share is forecast to drop to 45% to 50%, with health insurance exceeding 35% and pension insurance rising to 15% to 20%. 

Policies will become more comprehensive and long-term, balancing savings, protection, and health and pension services.

Financial integration will expand moderately, with investment-linked products growing but remaining below 10% of the market due to high volatility in financial markets. 

Distribution channels will diversify, with a reduced reliance on insurance agents, whose share is expected to fall from 57% to 45%. 

Bancassurance will maintain a 35% share, whilst brokerage sales are projected to triple to 15%.

China’s pension insurance market, still in its early stages, will focus on middle- and high-income groups, offering more flexible products and long-term investment strategies to address longevity risks. 

Health insurance will see growth in products supplementing basic social security, particularly for out-of-pocket expenses, premium medical services, and lost income during illness. 

Insurers must also upgrade their operational systems to handle the complexity of health insurance claims and integrate with social security systems.

Digital transformation remains a key priority, with significant progress targeted by 2025 under policies from the China Banking and Insurance Regulatory Commission. 

Despite challenges, insurers are encouraged to embrace customer-centric strategies, improve operational efficiency, and build advanced technological infrastructure.

China’s relatively low per capita GDP of $12,500 and insurance penetration of 3.28% indicate significant room for growth. 

BCG advised insurers to invest in innovation, expand their product portfolios, and strengthen partnerships to capture the opportunities in health and pension insurance, ensuring long-term value creation in a rapidly evolving market.

($1.00 = RMB7.26)