PICC Life Approved for Rural Individual Life Microinsurance Pilot Program

June 13, 2010, PICC Life Insurance (PICC), under the People's Insurance Company (Group) of China Ltd, won approval from the China Insurance Regulatory Commission (CIRC) to develop a rural individual life microinsurance (MI) pilot program in 16 Chinese provinces and municipalities.

PICC has obtained permission to offer two different rural individual life accident injury insurance products in 16 provinces and municipalities including: Hebei, Shanxi, Inner Mongolia, Heilongjiang, Anhui, Jiangxi, Shandong, Henan, Hubei, Guangxi, Hainan, Chongqing, Sichuan, Yunnan, Shaanxi and Gansu. According to a statement made by the CIRC, the particular pilot sites within the province will be determined in association with local insurance regulators. The CIRC also requires PICC to expand the coverage area of microinsurance services (MIS) as the pilot program develops and to work out a replicable model of rural individual life MIS.

In 2008, the CIRC initiated a pilot MI program in order to encourage insurance companies to design and develop MI products. PICC is the seventh company given permission to participate in the program, following China Pacific Life Insurance, Taikang Life Insurance, China Life Insurance, New China Life Insurance, Ping An Annuity and China Post Life. According to statistics published by the CIRC, pilot MIS programs exist in 19 provinces providing RMB 136.4 billion in coverage for 8.71 million people. In 2009, premium income from MI in China reached RMB 230 million.

Insurance is still very poorly understood in China, even among more sophisticated urban populations; it is not understood at all at the rural populations, especially in less developed rural areas, which are the most vulnerable to climate change. While commercial companies have begun to infiltrate services in villages throughout the 19 provinces, the village-to-village policies being written are not user-friendly and often show signs of abuse (e.g. Benefits for village leaders who sign up whole villages without buy-in options for farmers, insurance agents only visiting once a year etc.). Over the years, these commercial insurance programs have gradually added new products to their portfolios. Recently, accident insurance and health insurance policies have started appearing which mostly cater to the white-collar population. Usually these are restricted to highly specific acute and grave conditions and involve a one-time lump sum payment which effectively ends the relationship with the patient.

China is currently undergoing a massive overhaul of the state healthcare system, including different state health insurance and reimbursement schemes. In February 2010, PlaNet Finance China surveyed four microfinance institutions throughout China and found that contrary to what is presented in the media; farmers are still being refused health treatment if they cannot pre-pay the costs. Huge strides remain to be taken in the Chinese microinsurance sector. In a push towards financial inclusion and the microfinance sector, PlaNet Finance China remains vigilant of this developing industry and contributes towards its sustainability. 

Sources:
http://chinamfi.net/news_show.asp?/2495.shtml
http://insurancenewsnet.com/article.aspx?id=198126&type=international
http://insurance.hexun.com/2010-06-13/123975677.html