Universal Insurance "slims down" 51 billion yuan year-on-year in the first 5 months of the stall
Our reporter Su Xianggao
Following a 19% year-on-year decline in universal insurance premiums in 2020, universal insurance premiums continued to shrink this year.
The latest data disclosed by the China Banking and Insurance Regulatory Commission shows that in the first five months, the “new payment of policyholders’ investment payments” representing universal insurance premiums (in this article, universal insurance premiums refer to this indicator) reached 332.4 billion yuan, a year-on-year decrease of 51 billion yuan. 13.3%; the proportion of total insurance premiums of life insurance companies has further declined from 18% in the whole year of last year to 15% in the first five months.
Regulatory guidance and active transformation of the industry are the main reasons for the continued contraction of universal insurance.
Many industry insiders told the "Securities Daily" reporter that the company has already started its transformation, increasing the proportion of protection insurance products such as health insurance and long-term life insurance, and reducing the premium income of medium and short-term universal insurance and investment-linked insurance, which is in line with regulatory guidance. It is also conducive to the long-term and healthy development of the company, and is more in line with consumer insurance needs.
Of course, insurance companies will inevitably endure short-term liquidity pressures, market share and scale declines, and many other pains to reduce universal insurance premiums.
From "savage growth" to returning to its roots
Universal insurance is not "universal" in fact, it is essentially a life insurance product with both protection and investment functions.
Part of the universal insurance premium is used for risk protection, and the other part is used for investment accounts.
However, compared with health insurance, life insurance and other products, its risk protection function is weak.
The reason why it is called "omnipotent" is that the insured can flexibly adjust the sum assured, premium and payment period, and determine the best ratio of protection to investment.
Universal Insurance originated in the United States in the 1980s and was introduced to my country in 2000.
Driven by favorable factors such as the development of the capital market and the gradual liberalization of insurance capital equity investments, in 2015 and 2016, the year-on-year growth rate of universal insurance premiums reached 95% and 55%, respectively, and a group of small and medium-sized insurance companies' universal insurance premiums soared. .
In 2016, the ratio of universal insurance premiums to the total premiums of life insurance companies reached a historical peak of 34%.
Because of its strong financial management attributes and the ability to expand the scale of premiums in a short period of time, the market calls it scale insurance or wealth management insurance.
However, since 2017, with the tightening of regulatory policies and the active transformation of insurance companies, universal insurance has begun to return from "barbaric growth" to the original source of insurance.
In the first five months of this year, universal insurance continued to shrink, and the proportion of insurance premiums in the total premiums of life insurance companies fell to 15%, far below the historical peak.
Many insurance company executives told reporters that compressing universal insurance and other products and returning to the original source of insurance is a major trend in industry transformation.
Zhou Yuhang, deputy general manager of Hongkang Life Insurance, said in an interview: “We actively restricted the sales of participating products and increased the sales of protection products such as whole life insurance, critical illness insurance, and annuity insurance. Moving forward does not meet the basic requirements of insurance."
Bank-related insurance companies have always had a relatively high percentage of universal insurance premiums, but they have continued to shrink in recent years.
A senior executive of a bank-related insurance company told reporters: "Since last year, the company has continued to promote business transformation: first, risk protection and long-term savings insurance will be the focus of the company’s development; second, while ensuring scale growth, continue to significantly reduce Universal insurance premium scale."
"Health insurance products can not only meet the needs of customers for cost loss protection caused by major illnesses, but also meet the supplementary protection of customers' medical expenses. In the future, the company's bancassurance channel will always regard health insurance as an important part of the customer's insurance configuration. Provide a full range of insurance protection." said the person in charge of the above-mentioned bank-related insurance company.
The development of protection insurance is the consensus of leading insurance companies.
Su Hengxuan, President of China Life, told reporters that in recent years, the company has focused its efforts on "sales transformation" and "guaranteed development", and has taken the initiative to reduce the bulk transaction business, vigorously develop the sustainable long-term regular delivery business, and actively promote the guarantee and long-term savings business. business.
In fact, whether it is regulatory advocacy or active transformation of the industry, the essential reason for the compression of universal insurance comes from the high-quality development background, and insurance companies are concerned about the operating risks of universal insurance on the liability and investment ends.
From "buy, buy, buy" to extinction
Leading insurance companies have always occupied most of the market share, and a group of small and medium-sized insurance companies who want to quickly seize market share have to find another way, and universal insurance has become an effective tool.
The path for insurance companies to rapidly expand their market share through universal insurance is to rapidly expand the scale of premiums through universal insurance with attractive settlement interest rates, and then look for assets with matching duration and yield to invest (some insurance companies will also look for assets first. Resale insurance), when the premium scale is large enough and the investment income covers the cost, insurance companies will have excess profits.
The ChinaBond Credit Insurance industry research team believes that the main purpose of universal insurance is to rapidly expand the scale of insurance investment, so that the investment side has a scale effect to expand profits and maximize returns.
Some insurance companies themselves control projects with higher returns.
In this way, insurance companies can achieve the purpose of raising funds by rapidly expanding the scale of premiums on the underwriting side.
Around 2016, in order to attract policyholders, universal insurance settlement rates reached 8% or even higher.
This puts a lot of pressure on the investment side.
If an insurance company wants to cover the high cost of the underwriting side (settlement fee + comprehensive cost + channel fee), the rate of return on the investment side must be higher.
This requires insurance companies to have strong investment capabilities, and the market has sufficient assets that can match the duration and yield of universal insurance premiums.
If this is not the case, insurers will suffer losses and even liquidity risks.
Under pressure from the debt side, at that time, insurers began to "buy, buy, and buy" in the capital market, frequently placarding listed companies such as banks and real estate companies. The "Baowan Controversy" was a typical case.
In addition to the investment side, mass sales of universal insurance will also put pressure on the underwriting side of insurance companies.
Universal insurance needs to set aside more reserves, which consumes a lot of shareholder capital.
If shareholders can continue to inject capital, they can maintain a stable solvency; if the capital cannot be replenished in time, and continue to expand the scale of universal insurance, insurers will encounter a series of problems such as insufficient solvency.
In the past two years, there are still insurance companies that have previously sold universal insurance on a large scale and have to maintain solvency at a level slightly above the warning line. Business development has been greatly restricted.
A relevant person in charge of a small insurance company told reporters that because the business of universal insurance was relatively high before, and the shareholders' willingness to increase capital was not strong, the company's business development must maintain a certain pace. Don't dare to go too fast, otherwise there will be solvency. insufficient.
Time has changed, and with the shrinking of premiums, the phenomenon of universal insurance has disappeared.
In the first half of this year, there was not a case of insurance fund raising placards.
Although there is an event of placarding of insurance funds in 2020, the sources of funds are from insurance companies’ own funds, funds from traditional insurance accounts, etc. The placarding entities have also become large insurance companies such as China Life and China Pacific Insurance from companies that have substantially sold universal insurance. .
The reporter consulted the data disclosed by some insurance companies with higher settlement rates of universal insurance and found that the universal insurance with 7% and 8% yields was hard to find.
"The world and the world are all in the same force, and heroes are not free to transport." The universal insurance that gathers time, place, and people has made a group of insurance companies become the enviable "dark horses" of the market, and has also created the myth of life insurance companies' rapid growth. Let a group of nameless insurance company helms rise to fame. However, as the insurance industry continues to return to the origins of insurance, these insurance companies and the "big brothers" have lost their former glory and have returned to silence again. (Securities Daily)