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By 2035, almost a third of China’s population will be over 60 years old. But amid these broader concerns, one sector continues to shine: insurance.
The same aging trend that threatens productivity and places a burden on its social security system is increasing the demand for health and retirement-based insurance products. Unlike sectors associated with a volatile trade cycle, life and health insurance companies benefit from long-term demographic tailwinds. Bain estimates that China is expected to drive more than a quarter of global premium growth by 2030.
At the same time, the insurance industry has emerged as one of the earliest and most important beneficiaries of the artificial intelligence revolution. Insurance is particularly well positioned to leverage advanced data analytics and machine learning to risk price risk more accurately and provide personalized coverage. AI-led insurers use these technologies to provide tailored solutions by analyzing user data such as health metrics and lifestyle habits to dynamically adjust policies and pricing. This digital transformation is already evident in the rapid growth of small, technology-driven online insurers and brokers in China.
One important example is Yuanbao. It uses over 4,000 AI models to analyze health and lifestyle data to match users with personalized insurance products. Sales rose by around two-thirds last year, and the recent US listing is a rare move considering listing pressures and geopolitical tensions, and should boost it as it seeks to expand even further.
Meanwhile, the established giants may be behind digital innovation, but they remain some of the safest and most stable names in the sector. China Life, one of the largest in the country, has more than doubled its net profits last year, supported by strong premium growth. Its core solvency ratio reached 153%, well above China’s regulatory standards. A 40% increase in revenue for the first quarter of this year reflects sustained momentum.
Despite these strengths, the sector is not without its challenges. Lower interest rates narrow down investment yields and undermine important sources of profitability. Meanwhile, traditional agent-based distribution models are tense around digital disruption, forcing insurers to spend more to create new businesses on the same level. With increasing competition, these challenges have been focusing on the sector’s stock prices in recent months.
Still, as China’s population and its manufacturing engine lose momentum, sectors that can leverage demographic changes and digital innovation stand out as rare bright spots. Insurance is one of the few things at that intersection.
june.yoon@ft.com
