China's first specialized health insurance company commenced
business on Friday, blazing a trail that promises to better extend
health insurance coverage.
The establishment of PICC Health Insurance Co Ltd also marks a
step forward in the plans of PICC Holding Company, which controls
China's largest property insurer PICC Property and
Casualty Co Ltd, to grow into a financial conglomerate.
The company, with 1 billion yuan (US$120 million) in registered
capital, is 51 percent owned by PICC Holding and 19 percent owned
by German health insurance giant DKV. The remainder is held by
three other companies including China Huawen Investment Holding Co
Ltd.
The establishment of health insurance companies "will help
alleviate a shortage of health insurance products and reduce the
financial burden and management costs of the Chinese government,"
said Tang Yunxiang, chairman of PICC Health Insurance.
"The establishment of PICC Health Insurance is also a reflection
of PICC's strategy of comprehensive operations," he added.
PICC Holding also has an asset management arm, and is reportedly
preparing a life insurance subsidiary.
The demand for health insurance is high in the world's most
populous country. As many as 65 percent of Chinese residents see
illness as one of their three biggest concerns, PICC Holding
said.
According to a survey by McKinsey, the market could hit 300
billion yuan (US$36 billion) by 2008.
Yet despite the huge growth potential, commercial health
insurance still plays a minor role in the local market, covering a
meager 3 percent of Chinese people and 6 percent of local
residents' total medical expenditure, said Wu Dingfu, chairman of
the China Insurance Regulatory Commission, the market watchdog.
And local health insurance providers?-- including 29 life
insurers and eight property insurers?-- are frustrated with
the inherent risks of the business. Loss ratios for health
insurance services has reportedly amounted to as much as 200
percent at some insurers in recent years.
(China Daily April 9, 2005)
