Refile: Tantrums, concubines, hotpot burns and smog: China insurers have it covered

Sino-Life

01/09/2014 02:51

(Removes extraneous words below lead paragraph) 
    By Clare Baldwin and Diana Chan 
    HONG KONG, Sept 1 (Reuters) - Your child throws a tantrum 
and smashes something? Take out "naughty child insurance". 
Similarly, buy cover against your bride becoming pregnant before 
the honeymoon, your team being knocked out of the soccer World 
Cup, burning your tongue eating hotpot or if smog ruins your 
holiday. 
    Quirky, maybe, but China's insurers are turning to ever more 
creative ways to drum up business in a market where growth has 
stalled and penetration rates of around 3 percent, half the 
global average, are little changed from a decade ago. Premiums 
in China are less than $278 billion a year, way below the $1.3 
trillion paid in the United States and below even the UK's $330 
billion, according to Munich Re and Swiss Re data. 
    "It's consumer acquisition, a way to engage new customers," 
said Joseph Ngai, who heads the Greater China financial 
institutions practice at McKinsey in Hong Kong. "It's primarily 
marketing." 
    While most of these policies are short-term promotions, they 
offer insight into daily concerns in the world's most-populous 
nation - such as marriage and children. 
    Ping An Insurance Group Co of China Ltd  601318.SS  
 2318.HK , the world's second-biggest life insurer by market 
value, has offered an "Accidental Pregnancy Before Honeymoon" 
policy to cover the cost of having to unexpectedly cancel a 
honeymoon. It also offered a payout just to wives in the case of 
divorce, and another policy, akin to an investment plan, that 
paid out - after a certain period - if a couple stayed together, 
local and state media have reported. 
    Last year, Ping An offered another policy incentivising 
couples to marry in the 10 days leading up to this year's Nov. 
11 "Singles Day". The policies, which went on sale at midnight 
and included 12-month membership to an online matchmaking site, 
sold out in 10 minutes, the official China Daily newspaper 
reported. 
    In an emailed response to Reuters for this article, Ping An 
Property & Casualty said it seeks to "solve or alleviate real 
life problems." While it still sells "innovative" products, it 
said it is no longer offering pregnancy, marriage and singles 
insurance. 
    Sino-Life Group Ltd  8296.HK , Sunshine Insurance Group and 
Anbang Insurance Group also sold married couples 
"concubine-proof", "red rose" and "rich flower" insurance 
policies, according to the China Daily and the companies' 
websites. 
    For young children, there's now insurance for recalled 
infant milk formula,  ID:nL4N0QS2P9  and for little ones who get 
out of hand People's Insurance Group of China Co Ltd (PICC) 
 1339.HK  offers a policy against "mischievous and destructive" 
habits. The policy - tagline: "Why not let us pay for the 
child's fault?" - costs 44 yuan ($7.16) and provides cover up to 
100,000 yuan for 12 months. 
    Chongqing-based Ancheng sells a similar policy in three 
different versions, with parents of the naughtiest children 
paying 116 yuan for a 5,000 yuan payout. 
    Many insurers have latched on to this wave of creative 
policy marketing, with Ancheng, Ping An and ZhongAn, backed by 
Ping An and internet giants Alibaba Group Holding Ltd 
 IPO-BABA.N  and Tencent Holdings Ltd  0700.HK , among the more 
aggressive.  
     
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    WORLD CUP "HEARTBREAK" 
    During the recent soccer World Cup in Brazil, Ancheng and 
ZhongAn offered policies allowing Chinese customers to pay for 
protection against over-drinking, being attacked by hooligans 
and a "Heartbreak" policy for when their favourite team was 
eliminated. Uptake wasn't huge, but the policies succeeded in 
winning plenty of media coverage. 
    For the industry's regulators, though, some of these 
policies skirt too close to a Chinese love of gambling. In June, 
the regulator said it would increase penalties for insurers 
selling products with "gambling or gaming" properties. 
    A policy has to offer "meaningful cover" and not just a 
financial bet, said Guanjun Jiang, a China-based Milliman 
actuary, adding that a WeChat group with about 100 actuaries and 
other professionals criticized the World Cup policies as 
"gimmicks" that didn't adhere to the principles of insurance. 
    ZhongAn confirmed it sold the World Cup over-drinking and 
hooligan policies. Ancheng did not respond to requests for 
comment. 
    Other attention-grabbing tactics cover Chinese cultural 
events. Ancheng has a policy covering any medical costs 
resulting from burns while eating hotpot, a Chinese tradition 
involving cooking raw meat and vegetables in a boiling pot of 
soup placed at the centre of the table. 
    Other Ping An and PICC policies - which were quickly shut 
down by the China Insurance Regulatory Commission - paid out if 
city smog levels topped a certain level for a specified period, 
if customers were hospitalized due to smog, or if tourists spent 
at least two days in a smoggy city.  ID:nL4N0QP2OM  
    And foreign insurers, too, have tried their luck.  
    During last year's Mid-Autumn Festival, Germany's Allianz 
 ALVG.DE  teamed up with Alibaba's Taobao insurance to guarantee 
sightings of the full moon, paying out between 50 and 188 yuan - 
and in some cases a pack of moon cakes - if bad weather obscured 
the view. 
    (1 US dollar = 6.1423 Chinese yuan) 
 
 (Editing by Ian Geoghegan) 
 ((Clare.Baldwin@thomsonreuters.com; + 852 2843 6571; Reuters 
Messaging: clare.baldwin.thomsonreuters@reuters.net)) 
 
Keywords: CHINA INSURANCE/