The market for private health insurance in China will surge fivefold to 1.1 trillion yuan ($167 billion) by 2020 from 241 billion yuan in 2015, as middle-class and wealthy Chinese look for an alternative to the public insurance system, a report released by BCG and Munich Re showed on Wednesday.
The report also pointed to government policies in support of private healthcare.
Consumers are being encouraged to use private insurance and the Chinese government has introduced incentives for more private hospitals to form and operate, making the private hospitals share data with insurers.
The report said the most likely purchaser of reimbursement insurance is 35 years to 55 years of age and married with children, with a minimum annual household income of 200,000 yuan.
This group is expected to grow to more than 40 million by 2020, and the wealthiest consumers in this group would be willing to pay between 30,000 yuan and 60,000 yuan for a reimbursement policy covering a family of three.
The report forecast increasing profitability for private plans, partly due to the fact that government policies support the privatization of insurance and healthcare, such as tax breaks for private health insurance.
The fastest growth is expected in reimbursement policies, which are more expensive for high-end policies but more flexible than the critical-illness policies that many Chinese have, according to the report.
The report said insurance companies need to understand the characteristics and preferences of different customer segments.
Also, these companies need to know the amount of money they are willing to spend on reimbursement insurance and what they expect to receive in return.
