Insurance companies in China apply different business models in regard to retirement businesses. Some insurance companies focus on individual annuities; some extend retirement businesses horizontally, selling corporate annuities, group pensions and individual annuities; while some other companies extend their retirement business vertically, such as entering into the retirement apartment business.
In China, reverse mortgages face cultural opposition, and will not be popular in the next five years. The main reasons are:
• Old people want to leave their apartments to their children after death
• There is no legacy tax in China
(The target market for reverse mortgages is people who have more than one apartment or no child. There is no insurance company or bank that provides this kind of business yet.)
• The possibility of apartment prices going down is the main factor worrying financial institutions
• Banks do not have sufficient data for life expectancy
• Regulations are not complete: China's land usage is limited to 70 years. If it is not renewed or does not get approval, then, theoretically, the land reverts to the state.
So the more acceptable method for old people is to sell their apartment and move to a cheaper one. Another way is living in retirement apartments and renting their own apartments out to provide income and cover the cost. The problem is that retirement apartment facilities are not good as of yet.
For this reason, some insurance companies are extending retirement business value chain, and have started to invest in retirement communities. For example, Taikang Life is building a retirement community in a suburb of Beijing, and Union Life is building a retirement health care community in a suburb of Wuhan.
For more, see Celent new report Pensions in China, Hong Kong and Singapore: Opportunities for Insurers.
This blog has been reprinted with permission from Celent.
Wenli Yuan is a senior analyst in Celent's Asia Research Group.
Readers are encouraged to respond to Wenli using the “Add Your Comments” box below. She can also be reached at email@example.com.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access