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Bancassurance in China: Life, Non-Life and Creditor Insurance is a study and related PartnerBASE™ dataset examining the provision of life, non-life and creditor insurance by banks and other lending institutions in China.

Drawing on the results of a survey of over 100 banking entities in China, the study verifies the percentage of organisations investigated that distribute each of the following 13 types of insurance: accident insurance, creditor insurance related to consumer finance, creditor insurance related to credit cards, creditor insurance related to mortgages, critical illness insurance, health / hospital cash plans, household insurance, income protection insurance, investment-related life insurance, medical expenses insurance, personal motor insurance, retirement savings, and risk life insurance.

Table Of Contents

Bancassurance in China: Life, Non-Life and Creditor Insurance
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Distribution partnerships with banks and other lending institutions constitute the focus of this report 3
Rationale 3
Bancassurance offers a significant distribution channel for life and non-life insurance in China… 3
Methodology 4
Survey of banks and other lending institutions 4
Finaccord's survey focuses on nationwide and near-nationwide bancassurance agreements 4
Market data 5
Definitions 6
Investment-related life insurance 6
Retirement savings 6
Risk life insurance 6
Critical illness insurance 6
Income protection insurance 7
Accident insurance 7
Health / hospital cash plans 7
Medical expenses insurance 7
Personal motor insurance 7
Household insurance 7
Creditor insurance 8
Mortgages, consumer finance and credit cards 8
Weighted provider share of partnerships 8
Operating models 9
Abbreviations and exchange rates 9
PartnerBASE and market data annexe 10
Finaccord 10
2.0 MARKET BACKGROUND 12
Banks and other lending institutions covered 12
Introduction to the banking sector 12
By total number of retail customers, Postal Savings Bank of China is a market leader… 12
… followed by the big four state-owned commercial banks 13
In terms of its total assets, ICBC was likely to be the largest bank in the world at the end of 2014 13
Various other types of institution also compete in China's banking market… 13
… including banks that are owned in part by private investors… 14
… and more than 140 city commercial banks, some of which have already carried out IPOs 14
The number of rural commercial banks has expanded rapidly in recent years… 14
… and they are particularly adept at reaching customers who have not previously banked 15
In the context of the market as a whole, foreign banks in China occupy a rather marginal position 15
Introduction to bancassurance 15
China's bancassurance market remains somewhat under-developed in terms of product diversification… 15
… in spite of the introduction in 2003 of regulations that were designed to encourage it… 15
New regulations introduced in 2010 and 2011 have somewhat disrupted the progress of bancassurance 16
There has been a gradual shift towards major banks creating captive or joint venture insurance firms 16
Co-owners of joint ventures include AXA, BNP Paribas, Cigna, Prudential and Sun Life Financial 16
The most recent regulations relevant to bancassurance have focused on consumer protection 17
Eight Chinese banks promote ten or more of the 13 policy types investigated… 17
… but a half distribute none at all 17
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS 18
Insurance market size and growth 18
The value of the Chinese market for investment-related life insurance reached a new high point in 2014 18
The popularity of unit-linked insurance products has fluctuated greatly in recent years 19
There is a market gap for the provision of pension products for Chinese citizens with higher incomes 19
Distribution share of banks 20
Banks' share of distribution for life insurance has begun growing again 20
Bancassurance provision rates, operating models and partnerships 20
Investment-related life insurance 20
Most banks selling forms of investment-related life insurance do so with multiple product providers… 20
… and these even include several of those that own captive or joint venture insurers 20
China Life is ranked first by weighted share of partnerships, followed by PICC and Ping An… 21
… by virtue of 16 partnerships, all of which are non exclusive…. 21
… and secures around one third of its total premium income from the bancassurance channel 21
Across PICC's six relationships in this field, only that with Industrial Bank is exclusive to it 21
Ping An works for investment-related life insurance with five banks in addition to Ping An Bank 21
Two of CPIC's five relationships with banks in this arena are exclusive ones 24
Minsheng Life holds just one distribution partnership albeit one with vast potential 24
Aside from CPIC and PICC, ten other insurers hold apparently exclusive relationships in this domain 24
Retirement savings 25
The number of banks offering retirement savings products has increased quite significantly in recent years 25
Exactly a half of those active in this sphere work with multiple external providers 25
Several of China Life's bank partnerships in this field are apparently exclusive ones 25
Taikang is ranked second in this field by weighted share of partnerships… 25
… followed by CPIC, China Post Life and New China Life 27
Eight other providers hold one exclusive partnership for retirement savings 27
Performance of key bancassurance underwriters 28
With one exception, the market shares of individual captive and joint venture providers remain quite low 28
4.0 PROTECTION-RELATED LIFE INSURANCE. 29
Insurance market size and growth 29
The market for protection-related life insurance has been declining in real terms 29
The market for term life insurance is traditionally limited but now being boosted by micro-insurance schemes 30
Critical illness insurance is an important product in China and often helps to meet medical expenses 30
Distribution share of banks 31
Bancassurance provision rates, operating models and partnerships 31
Risk life insurance 31
Risk life insurance is the policy type most commonly available from Chinese banks… 31
… and the provision rate has increased quite substantially in recent years 31
China Life is a provider to over a half of the 50 banks selling this type of policy… 31
… which is a far higher number than its closest rivals, PICC and Taikang 33
CCB Life is active in this field as both a captive and external underwriter 33
MetLife benefits from exclusive ties for risk life insurance with a couple of foreign banks 33
Critical illness insurance 34
Bank distribution of critical illness cover has become increasingly widespread in recent times… 34
… given a doubling of the provision rate between Finaccord's two surveys 34
CPIC lies just behind China Life in terms of its weighted share of partnerships in this field 34
Third-ranked BOC Insurance sells only through its parent, Bank of China… 34
… but the providers ranked fourth and fifth both collaborate with a number of banks 34
Taikang is used as a provider of critical illness insurance by Fudian Bank, Harbin Bank and Industrial Bank 36
Income protection insurance 36
Performance of key bancassurance underwriters 36
5.0 ACCIDENT AND HEALTH INSURANCE 37
Insurance market size and growth 37
Between 2010 and 2014, health insurance premiums easily outgrew accident insurance premiums 37
The various types of accident insurance sometimes overlap in their cover 38
Despite reforms there is still a funding gap when it comes to covering medical expenses in China 38
While private medical insurance has great potential the market is hampered by underwriting risks 39
Bancassurance is only just establishing itself as a distribution channel for medical expenses insurance 39
Distribution share of banks 39
Bancassurance provision rates, operating models and partnerships 40
Accident insurance 40
The availability of accident insurance via banks has also expanded very significantly 40
Taikang benefits from partnerships with Agricultural Bank of China plus four city commercial banks 40
Medical expenses insurance 42
The provision rate for medical expenses cover is relatively low but has also increased substantially 42
CIGNA and CMC is ranked second by weighted share of partnerships thanks to two major relationships 42
CITIC-Prudential is utilised by two banks in this sphere in addition to China CITIC Bank 42
Health / hospital cash plans 44
Banks are a bit less likely to offer health or hospital cash plans than other types of accident and health policy 44
Three providers are dominant in the analysis of weighted share of partnerships… 44
… in which China Life comes outside of the top five in spite of three relationships 44
Performance of key bancassurance underwriters 46
A number of key bancassurers underwrite accident and health cover as life insurance policies 46
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE 47
Insurance market size and growth 47
The value of the market for personal motor cover remains more than three times that for household cover 47
A basic motor liability insurance was made compulsory in China in 2006 48
Compulsory traffic accident insurance open to foreign firms in 2012 48
The market for property cover is still dominated by commercial insurance buyers. 48
…and most banks do not require mortgage borrowers to take out home insurance… 49
…while the government phased out a compulsory mortgage-related insurance product several years ago 49
Distribution share of banks 49
Bancassurance provision rates, operating models and partnerships 50
Personal motor insurance 50
Comparatively few banks in China have an arrangement for selling personal motor insurance… 50
… although Agricultural Bank of China is one of those that does, using Ping An as provider in this context 50
Household insurance 52
Through a single (but exclusive) link with ICBC, Huatai is ranked second behind Ping An 52
Anbang has deals with four banks although its weighted share of partnerships is relatively low 52
Performance of key bancassurance underwriters 52
7.0 CREDITOR INSURANCE 54
Consumer lending market size and growth 54
Mortgage lending 54
Mortgage balances outstanding are on track to exceed USD 2 billion in 2015 54
Non-mortgage lending 55
Total non-mortgage consumer lending balances more than tripled in value between 2010 and 2014… 55
Credit and other pay later cards 56
… and credit cards in circulation grew strongly in each year over the same period of time 56
Creditor insurance provision rates, operating models and partnerships 58
Creditor insurance linked to mortgages 58
Bona fide creditor insurance is on offer from relatively few mortgage lenders in China 58
By weighted share of partnerships, BOC Insurance and CCB Life are tied in second position 58
Creditor insurance linked to consumer finance 60
Policies linked to consumer finance have been introduced by several banks in recent years… 60
… with Ping An visible as the most prominent provider in this sphere 60
Creditor insurance linked to credit cards 60
Schemes for credit card payment protection insurance have yet to be developed 60
Creditor insurance risk coverage 62
Creditor insurance products in China are limited to cover for death and permanent disability 62
Creditor insurance market size, growth and forecast 63
The creditor insurance market is likely to have expanded quite rapidly in recent years… 63
. and the outlook to 2017 is also positive 64
LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY 1
Overview of bancassurance provision rates for different types of insurance in China, 2014 2
1.0 INTRODUCTION 3
Banks and other lending institutions in China contacted by Finaccord, segmented by type 5
2.0 MARKET BACKGROUND 12
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS 18
Gross written premiums for investment-related life insurance and retirement savings in China, 2010 to 2014 18
Gross written premiums for investment-related life insurance and retirement savings in China, 2010 to 2014 (table) 19
Distribution share of banks in total life insurance in China, 2010 to 2013 20
Bancassurance provision of investment-related life insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 23
Bancassurance provision of retirement savings in China, 2014: provision rate, operating models and weighted provider share of partnerships 26
Market share in total life insurance of key bancassurance underwriters in China, 2009 to 2013 28
4.0 PROTECTION-RELATED LIFE INSURANCE. 29
Gross written premiums for protection-related life insurance in China, 2010 to 2014 29
Gross written premiums for protection-related life insurance in China, 2010 to 2014 (table) 30
Bancassurance provision of risk life insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 32
Bancassurance provision of critical illness insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 35
5.0 ACCIDENT AND HEALTH INSURANCE 37
Gross written premiums for accident and health insurance in China, 2010 to 2014 37
Gross written premiums for accident and health insurance in China, 2010 to 2014 (table) 38
Bancassurance provision of accident insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 41
Bancassurance provision of medical expenses insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 43
Bancassurance provision of health / hospital cash plans in China, 2014: provision rate, operating models and weighted provider share of partnerships 45
Market share in total non-life insurance of key bancassurance underwriters in China, 2009 to 2013 46
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE 47
Gross written premiums for personal motor and household insurance in China, 2010 to 2014 47
Gross written premiums for personal motor and household insurance in China, 2010 to 2014 (table) 48
Bancassurance provision of personal motor insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 51
Bancassurance provision of household insurance in China, 2014: provision rate, operating models and weighted provider share of partnerships 53
7.0 CREDITOR INSURANCE 54
Residential mortgage lending balances outstanding in China (absolute and per capita), 2010 to 2014 54
Consumer non-mortgage lending balances outstanding in China (absolute and per capita), 2010 to 2014 55
Credit and other pay later cards issued and per capita in China, 2009 to 2013 56
Key data points for the consumer lending market in China, 2010 to 2014 57
Provision of creditor insurance linked to mortgages in China, 2014: provision rate, operating models and weighted provider share of partnerships 59
Provision of creditor insurance linked to consumer finance in China, 2014: provision rate, operating models and weighted provider share of partnerships 61
Risk coverage of creditor insurance policies in China, segmented by type of underlying product, 2014 62
Creditor insurance gross written premiums in China, segmented by policy type, 2010, 2014 and 2018 64
Creditor insurance gross written premiums in China, segmented by cover type, 2010, 2014 and 2018 65
Creditor insurance gross written premiums in China, segmented by policy and cover type, 2010, 2014 and 2018 65

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