qiao lijian, vice president of picc life insurance: innovative products in multiple fields to meet diverse insurance protection needs
2024-09-01
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
on august 17, the "2024 personal insurance high-quality development seminar" was held in suzhou. qiao lijian, vice president and chief actuary of picc life insurance, attended the conference and delivered a speech.
qiao lijian said that the high-quality development of the insurance industry has entered a substantive stage. we must firmly grasp the historic opportunity, closely focus on national strategies and social needs, serve the real economy and people's livelihood security, and give full play to the irreplaceable and important role of insurance in the process of realizing chinese-style modernization. we should actively practice the political and people-oriented nature of insurance, focus on the main responsibilities and main business, do a good job in the "five major articles", and increase high-quality financial services for major strategies, key areas and weak links.
in terms of serving science and technology finance, we provide a package of product solutions centered around the personal protection of scientific and technological talents. in terms of serving green finance, we continue to enrich our product supply centered around the personal protection of personnel in green development enterprises.
in terms of serving inclusive finance, we focus on major strategies and specific customer groups, and strive to build an inclusive product system to improve the level of protection and accessibility for specific groups of people.
in terms of serving pension finance, we will develop various types of commercial pension insurance and health insurance products, enrich personal pension products, long-term care insurance products, tax-preferred health insurance products, etc., effectively meet the people's diverse health and retirement needs, and better serve the construction of a multi-level pension security system.
in terms of serving digital finance, we rely on technologies such as big data and artificial intelligence to continuously improve the level of intelligence in customer profiling, product design and pricing, and risk control.
the following is the transcript:
on august 2, the state financial regulatory bureau issued the "notice on improving the pricing mechanism of life insurance products" (document no. 18) and the "notice on smoothly and orderly carrying out the related work of life insurance product switching" (letter no. 1001). not only does it require the scheduled interest rate of long-term insurance products to be reduced by 50bp, but it also proposes to establish a mechanism for linking the scheduled interest rate with the market interest rate and dynamically adjusting it.
1. background and significance of the introduction of the dynamic adjustment mechanism for product pricing
1. logical analysis of the change of the scheduled interest rate and product form
(1) the stage of change in the scheduled interest rate and product form
since the resumption of domestic life insurance business, the changes in product guaranteed interest rates and product forms have mainly gone through four stages.
phase 1: before june 1999, the period of high interest rates. before 1993, the one-year deposit rate was as high as over 10%, and then gradually decreased, while the interest rate gradually dropped from over 10% to 5%. during this period, the interest spread of the existing policies was seriously damaged. the company mainly operates ordinary whole life insurance and life insurance products.
phase 2: june 1999 to august 2013, low expected interest rate period. in june 1999, the one-year deposit rate dropped to 2.25%, and the regulatory emergency notice set a 2.5% upper limit for the expected interest rate, and the attractiveness of traditional insurance declined. in order to better meet customers' demand for returns, dividend, investment-linked, and universal insurance were launched one after another. thanks to the high investment returns brought by the rapid economic growth, new products became mainstream products, effectively controlling the risk of interest rate spread losses. by 2012, dividend insurance accounted for nearly 80% of the market share.
phase 3: from august 2013 to july 2023, the period of high expected interest rates for premium reform. as the yield of government bonds rises and the industry's investment yield remains high, regulators raise the upper limits of expected interest rates for various products. in august 2013, the expected interest rate for ordinary products was raised to 3.5%, and the expected interest rate for pension annuities or other annuity insurance with an insurance period of 10 years or more could be raised to 4.025%. in september 2019, it was unified to 3.5%; in february 2015, the upper limit of the minimum guaranteed interest rate for universal insurance was relaxed to 3.5%, and in september 2016, it was lowered to 3%; in october 2015, the premium reform of dividend insurance was launched, and the upper limit of the expected interest rate was raised to 3%. during this stage, universal, dividend, critical illness insurance, and increasing whole life insurance developed successively. the long-term policies sold during this period buried the risk of interest rate spread losses.
phase 4: from august 2023 to now, the period of declining scheduled interest rates. as the yield of government bonds declines, the difficulty of allocating high-quality assets increases, the capital market fluctuates greatly, investment returns decline, and the industry suffers from interest rate spread losses. regulators guide the reduction of liability costs. in august 2023 and september 2024, the upper limits of scheduled interest rates for various types of products will be further lowered, and the development of dividend insurance and other businesses will be pushed to the forefront again.
we can see that the scheduled interest rate is correlated with the market interest rate trend. the main product types are greatly affected by the economic and social environment and the scheduled interest rate. when the product's scheduled interest rate is higher, ordinary products have a better development momentum. when the scheduled interest rate is lower, dividend and universal products have better development than ordinary products.
(2) logic and trend of changes in the scheduled interest rate and product form
by comparing the three market interest rates in the notice (10-year treasury bond yield, 5-year deposit rate, and loan market quotation rate for loans over 5 years, among which the people's bank of china no longer announced the five-year time deposit benchmark rate since november 22, 2014, and then used the data of industrial and commercial bank of china; lpr has released data according to the new mechanism since august 2019) and the upper limits of the scheduled interest rates of different types of products, it can be seen that, first, market interest rates change frequently, and the recent downward trend is obvious. in the past five years, the lpr for more than 5 years has been lowered 9 times, and it was lowered to 3.85% last month. the five major banks lowered the 5-year deposit rate to 1.8%, and the 10-year treasury bond yield fell to 2.2%. second, the frequency of changes in the scheduled interest rate is low, and there is a certain lag.
2. the significance of establishing a dynamic adjustment mechanism for product pricing
affected by the downward trend of interest rates, the industry's asset yield continues to decline. the financial investment yield in 2023 is 2.29%, and the net profit is negative for the first time in nearly ten years. as the long-term interest rate trend declines, the risk of interest rate spread loss accumulates. the interest rate spread loss problem has become related to the high-quality development and long-term stability of the life insurance industry. in this market environment, the regulator has timely introduced a dynamic adjustment mechanism for product pricing, which provides very necessary policy support for the industry to transform its business strategy, and has far-reaching significance for the continuous promotion of high-quality and long-term stable development.
(1) establish a long-term mechanism for dynamic adjustment of the scheduled interest rate and a corresponding development management system to strengthen the coordination of assets and liabilities
previously, the upper limit of the scheduled interest rate was set by the regulatory authorities, and the adjustment had a certain lag. companies generally adopted the upper limit of the scheduled interest rate, and the liability guarantee cost was rigid in the long term. in order to adapt to changes in market interest rates, a mechanism for dynamically adjusting the scheduled interest rate linked to the market interest rate was established this time. the benchmark value of the scheduled interest rate was released by the insurance industry association, and each company adjusted its pricing in a timely manner according to market principles, and established a product development management system that is compatible with the dynamic adjustment mechanism of the scheduled interest rate.
this mechanism is a long-term mechanism for preventing and defusing the risk of interest rate spread losses. first, it is conducive to increasing sensitivity to market interest rates, reducing the risk of inversion between the scheduled interest rate and actual investment income, and improving the asset-liability management closed loop with products as the starting point. second, it is conducive to responding to economic cycle fluctuations more agilely. when long-term interest rates are in a downward cycle, the scheduled interest rate is adjusted down in a timely manner, which helps to prevent interest rate spread losses and avoid product speculation and suspension of sales; when long-term interest rates are in an upward cycle, the scheduled interest rate is adjusted up accordingly, which helps to maintain product competitiveness. third, it is conducive to reasonably guiding customer expectations, adjusting the scheduled interest rate according to market interest rates, and demonstrating the benefits of new product policies based on expected investment income, guiding customers to focus on the protection function. fourth, it is conducive to insurance companies to enhance their awareness of proactively preventing and defusing risks, improve the level of refined management, and thus enhance the overall stable operation capabilities of the industry.
(2) effectively improve the quality of liabilities by lowering the expected interest rate, deepening the integration of bank reporting and banking, and adjusting the product structure
the notice mentioned lowering the scheduled interest rate by 50bp, deepening the "integration of insurance and banking", promoting refined and scientific management of channels, eliminating policy arbitrage space between channels, further reducing liability costs, and adjusting product structure. these measures are conducive to improving the quality and efficiency of the industry, paying more attention to the contribution of mortality and expense differences, giving full play to the competitive advantages of insurance in a low-interest environment, developing protection products and interest rate-variable products, comprehensively reducing costs and increasing efficiency, and shifting from the past high reliance on interest rate spreads to balanced development of the three differences, reducing the risk of interest rate spread losses.
(3) expand and enrich the connotation and extension of insurance protection, and point out specific directions for optimizing product supply under the concept of big insurance
the diversified insurance needs of the people are being released faster. expanding and enriching the connotation and extension of insurance protection, and constantly meeting the diversified insurance protection and wealth management needs are the specific directions for optimizing product supply under the big insurance concept. however, after the adjustment of the pricing interest rate, the product rate may increase, and the attractiveness of a single product will weaken. how to find the balance of interests between customers, channels, and companies again? reducing liability costs, forming differentiated competitive advantages, and adapting supply and demand are the key. therefore, the notice requires that first, product functions should highlight protection, encourage the development of interest rate-changing products such as dividend insurance, and deeply integrate health management and elderly care services. these are conducive to the industry returning to the source of protection and forming a distinctive differentiated competitive advantage. second, strengthen the hierarchical and classified management of sales personnel and product suitability management, promote more adaptive supply and demand, and thus protect consumer rights. these will help to build a solid social security network and effectively play the role of economic shock absorber and social stabilizer.
2. response strategies and development outlook
1. innovative products in multiple fields to meet diverse insurance protection needs
the high-quality development of the insurance industry has entered a substantive stage. we must firmly grasp the historic opportunity, closely focus on national strategies and social needs, serve the real economy and people's livelihood security, and give full play to the irreplaceable and important role of insurance in the process of realizing chinese-style modernization. we should actively practice the political and people-oriented nature of insurance, focus on the main responsibilities and main business, do a good job in the "five major articles", and increase high-quality financial services for major strategies, key areas and weak links. in terms of serving science and technology finance, we will provide a package of product solutions around the personal protection of scientific and technological talents. in terms of serving green finance, we will continue to enrich product supply around the personal protection of personnel in green development enterprises. in terms of serving inclusive finance, we will focus on major strategies and specific customer groups, strive to create an inclusive product system, and improve the level of protection and accessibility of specific groups. in terms of serving pension finance, we will develop various commercial pension insurance and health insurance products, enrich personal pension products, long-term care insurance products, tax-preferred health insurance products, etc., effectively meet the people's diverse health and pension needs, and better serve the construction of a multi-level pension security system. in terms of serving digital finance, relying on technologies such as big data and artificial intelligence, we will continue to improve the level of intelligence in customer profiling, product design and pricing, and risk control.
picc life insurance has made some practical explorations in serving national strategies. in response to the needs of new urban residents in key areas such as entrepreneurship, employment, education, medical care, and elderly care, it has launched protection plans such as "hometown blessing", "cool blessing", and "pillar blessing".
for families with mental disabilities, we have tailored the "caring for stars" project model of "universal insurance + special needs trust + mental disability service system", built a financial social work service system, and provided professional insurance protection and financial planning services for the mentally disabled group.
in the charity sector, we explore new paths for inclusive finance, and through cross-sector collaboration and innovation, we develop the industry's first charity insurance to help charitable organizations obtain certain donation cash flows in the future.
the "driver-exclusive commercial pension insurance plan" launched in cooperation with online ride-hailing companies has explored an innovative operating model of "platform organization promotion, driver personal insurance, combination of personal payment and platform subsidies, insurance through the company's official website, and after-sales service provided by drivers' local agencies."
targeting internet customers, we launched the golden medical insurance million medical insurance, which offers sufficient protection, low premiums and good services, and has become an internet celebrity product among million medical insurance products.
2. vigorously develop interest rate variable products such as dividend insurance to better meet wealth management needs
from the perspective of customer demand, with the increasing aging of the population, the social demand for pension security and wealth management products has increased rapidly. interest rate variable products such as dividend insurance can meet customers' demand for fund management and pension security with guaranteed and floating returns. from foreign experience, under the situation of continued low market interest rates, interest rate variable products such as dividend insurance account for a high proportion, which also reflects the insurance consumption trend in mature markets. from the perspective of insurance companies, interest rate variable products such as dividend insurance can allow policyholders and insurance companies to share investment risks through the income adjustment mechanism, reasonably disperse interest rate risk, and are also important businesses to maintain stable scale.
so how can we better promote the development of profit-changing products such as dividend insurance?
from the product perspective, optimize product design, highlight insurance protection functions, differentiate benefit demonstrations, and emphasize interest rate risk sharing and profit sharing.
from the sales side, we will increase sales training, cultivate customer needs, adapt to customer needs, reasonably guide customer expectations, and strictly prevent sales misleading.
from the asset side, investment performance will directly affect the benefits of dividend insurance, and investment will become an important competitive advantage of interest rate-changing products such as dividend insurance. therefore, we must continuously improve investment management capabilities, optimize asset allocation structure, and increase investment returns.
3. focus on service extension and technology empowerment to enhance the overall competitiveness of products
the era of high interest rates and high dividends in life insurance is becoming a thing of the past. we need to rely on differentiated product services to better meet the diversified needs of customers. the combination of services and technology will enhance the company's core competitiveness and high-quality development capabilities.
first, deeply integrate with services to enhance product competitiveness. against the backdrop of an aging population, pension insurance, medical insurance, nursing insurance, and disability insurance may become one of the important development directions of the life insurance industry in the future. to further enhance the comprehensive competitiveness of products, we can create a health care service ecosystem, integrating the investment side, payment side, and service side to meet customers' personalized, differentiated protection and service needs.
the second is to use scientific and technological means to improve product innovation. by applying scientific and technological means to all aspects of product design, business development, operation management, and customer service, we can improve efficiency and reduce costs internally, and improve experience and reduce risks externally. for example, in response to the risk of claims deterioration in critical illness insurance, we can further reduce the risk of adverse selection by introducing risk control models, intelligent underwriting and other technologies; in response to the uncertainty of the incidence rate of critical illness insurance, we can rely on big data and other scientific and technological means to improve the accuracy of incidence prediction; through interactive product design, we can help customers develop good health habits and reduce the risk of illness.
picc life insurance company is actively exploring a new business model of "insurance + elderly care health services + technology", building a "warm heart sui yue" health care service system, using insurance products as the driving force and high-tech empowerment to coordinate and promote the integrated development of elderly care scenarios, elderly care products, and elderly care services, providing customers with institutional elderly care, home elderly care, panoramic medical care, health services, travel elderly care and other services. the vr cloud travel service project explores the use of virtual reality technology to establish mobile vr display to improve service efficiency.
4. strengthen cost reduction and efficiency improvement to help improve the quality and efficiency of business management
comprehensively deepening the "integration of reporting and banking" and controlling the cost and quality of liabilities, thereby increasing customer returns on a low-cost basis, will be a necessary means to improve competitiveness.
in recent years, picc life insurance has strengthened its professional operations and refined management, vigorously reduced its liability costs, and its funding cost rate dropped by 74 basis points in the first half of the year, continuously reducing costs and increasing efficiency.
in terms of cost reduction, first, we will strengthen underwriting and pricing management, design insurance products fairly and reasonably, determine pricing assumptions scientifically and prudently, optimize product structure, and strictly control business entry. second, we will strengthen the quality control of claims, actively promote anti-counterfeiting and anti-fraud in claims, and reduce the leakage of claims benefits. third, we will strengthen the management of cost standardization and authenticity, and continuously improve the input-output effect of costs. fourth, we will focus on asset, fund, and capital management, improve the efficiency of use and operation, reduce inefficient occupation, and promote value preservation and appreciation.
in terms of efficiency, first, we will focus on the synergy of customers, products and teams, aggregate the advantages of all parties, and give play to synergy and efficiency. second, we will adhere to the principle of keeping integrity and innovation, improve the level of risk reduction services, and give play to innovation and efficiency. third, we will strengthen integration and sharing, strengthen standardized, intensive and standardized management, and give play to sharing and efficiency. fourth, we will focus on promoting scientific and technological construction and institutional and mechanism reform, strengthen scientific and technological empowerment, and give play to scientific and technological efficiency.
new challenges and new opportunities. by focusing on reducing debt costs, improving business structure, strengthening characteristic operations and refined management, and effectively preventing risks, the industry will surely change its development model, improve development quality and efficiency, and create a new situation of high-quality development!
