Critical Illness Insurance in China - Understanding customer preferences
26 Sep 2016
New report from Swiss Re reveals that diverse preferences among Chinese consumers require customised product designs. The findings of this study show that critical illness should move away from traditional cost- and experience-based product designs to a holistic customer preference-oriented business model. This will yield greater customer satisfaction, bring improved sales and help to close the protection gap.
A new study conducted by Swiss Re into consumer purchase preferences for critical illness (CI) insurance in China reveals that preferences differ significantly across Chinese consumers. The study demonstrates an approach by which insurers can develop greater appreciation of the drivers behind customers' product choices. These drivers include product features that create value from consumers' information and can help instruct the design of an effective business strategy.
The methodology used is called discrete choice experiments. This experimental approach is a state-of-the-art method to shed light on consumer preferences. It is the analysis of consumer preferences in a hypothetical market or decision-making situation. Discrete choice experiments have been used with success in many industries, including a study conducted by Swiss Re in the German term life insurance market.
The objective of this study was to collect data on consumer preferences for critical illness insurance products in China. This data allows us to help clients to design an optimal product portfolio and help them to navigate in the competitive critical illness insurance market. To do so we developed a market simulation tool that can be used to predict market shares for hypothetical new products in a competitive market.
Key findings of the report include:
- The critical illness insurance market in China is growing fast, and is highly competitive. Such a business environment requires insurers to seek competitive advantages and differentiation over their peers.
- One way of achieving this is to move away from traditional experience-based product designs to a holistic preference-oriented approach, which requires insurers to better understand their customers.
- The present study measures the preferences of consumers in China for CI products, and identifies the drivers behind product choices. Wide differences in preferences emerge, which are only in part explained by demographics.
- This study will enable insurers doing business or seeking to do business in China to tailor product designs in order to penetrate more granular client segments and help to reduce the protection gap in China.
The findings discussed in this report are only a synopsis of the survey results. We are happy to share further insights with insurers looking to find new ways to close societies' protection gaps.
Do you have any questions with regards to this report? Please feel free to contact Stephan Schreckenberg, Head Risk Research, Swiss Re Centre for Global Dialogue, or Clarence Wong, Chief Economist, Head ER&C, Asia.