China Life Insurance Co. Ltd. expects premium growth to return in full year 2018, despite reporting a decline in premium income for January and February, the company's president told a March 23 press conference.
In the first two months of the year, China Life recorded 154.6 billion yuan of gross written premiums, down 18.6% from 189.9 billion yuan for the same period the previous year. For 2017, the company on March 22 reported an 18.9% rise in gross written premiums to 511.97 billion yuan from 430.50 billion yuan in 2016.
Regulatory changes in the country have left insurance companies facing stricter rules on insurance policy design, particularly for single-premium products. Meanwhile, insurers have found increasing competition from banks, which are wooing customers with attractive higher-yielding wealth management products, said Lin Dairen, president of China Life, during the press conference discussing 2017 earnings.
Throughout 2017, the China Insurance Regulatory Commission pushed the country's life insurance sector to focus more on long-term protection products rather than short-term, single-premium policies that essentially functioned as investment products. The regulator set a ceiling of 4.025% on the guaranteed returns that life insurers can offer, while encouraging them to sell products that carry a duration of more than five years.
Lin pointed out that short-term wealth management products issued by banks now offer returns of around 5%.
Unlike Ping An Life Insurance Co. of China Ltd., China Pacific Life Insurance Co. Ltd. and New China Life Insurance Co. Ltd., China Life has not yet completed the transformation of its business strategy to trim sales of single-premium products via bank distribution channels, Lin said.
"We had planned to use one or two more years to cut down on single-premium business [in the bancassurance channel]," Lin noted, "but [circumstances] may force us to accelerate that transformation."
Lin expected to cap the single-premium products sold through the bancassurance channel at about 50 billion yuan in 2018, down from a goal of 60 billion yuan for 2017.
"However, we have only sold about 5 billion yuan to 6 billion yuan of such business so far this year, which has created a large shortfall to gross written premiums," the executive said, noting that China Life met the bulk of its 2017 target in January alone.
Going forward, Lin said he expects that renewal premium from policies sold in past years will fill the gap created by a decline in sales of single-premium policies. This segment is expected to rise to about 360 billion yuan in 2018, from 288.1 billion yuan in 2017.
As of March 22, US$1 was equivalent to 6.33 Chinese yuan.