The China Insurance Regulatory Commission (CIRC)
said yesterday that revised China Life Insurance Mortality tables,
showing probable death rates in each age group, will take effect in
pricing insurance policies from the beginning of next year.
The fact that Chinese people are now living longer
has forced the recalculation of life expectancies to help insurers
price policies more appropriately.
China's first such life insurance table was
released in 1995, and the CIRC began compiling statistics for the
new one from insurance records in August 2003.
The revised table is split into two parts:
non-pension business and pension business.
This has been done because mortality rates for
people buying pension policies are generally lower than those
buying non-pension products.
According to the new table, the average life span
for women who buy non-pension products is 80.9 years, up 3.1 years
on 1995, whilst men in this category can expect to live 76.7 years
on average, also up 3.1 years.
The equivalent ages for pension products were 83.7
for women and 79.7 for men, an increase of 4.7 years and 4.8 years
respectively.
"The launch of the new table is good news for us as
an accurate life mortality chart will help insurers guard against
potential risks," a Ping An Insurance Group manager told China
Daily.
Chen Wenhui, director of the CIRC's life insurance
regulatory department, said he believed the price of products such
as fixed-time life insurance policies would fall, but that for
savings-oriented products will see very little change.
For lifelong pension products, the price will
maintain its upward trend, as insurers have to pay more as people
live longer.
Chen said the new table will have only a limited
impact on the price of insurance policies, and it should not
trigger a buying spree since it is not mandatory and insurers will
have already begun to take longer life spans into account.
"The use of the new mortality table will mark a big
move towards a market-oriented process when setting premium rates,"
said Chen.
Unlike the original table, which was mandatory,
life insurance companies can now follow the new guidelines, the old
ones or their own mortality tables.
They can also adopt different mortality tables for
different types of products to target particular customers and
specific areas.
Customers can now expect to see different prices
for the same product from different insurers.
(China Daily December 23, 2005)