Celent Says

Breaking Ground: Insurers Investing in Retirement Communities

Wenli Yuan
Insurance Experts' Forum, March 29, 2011

Insurance companies in China apply different business models in regard to retirement businesses. Some insurance companies focus on individual annuities; some extend retirement businesses horizontally, selling corporate annuities, group pensions and individual annuities; while some other companies extend their retirement business vertically, such as entering into the retirement apartment business.

In China, reverse mortgages face cultural opposition, and will not be popular in the next five years. The main reasons are:

    •    Old people want to leave their apartments to their children after death
    •    There is no legacy tax in China

(The target market for reverse mortgages is people who have more than one apartment or no child. There is no insurance company or bank that provides this kind of business yet.)

    •    The possibility of apartment prices going down is the main factor worrying financial institutions
    •    Banks do not have sufficient data for life expectancy
    •    Regulations are not complete: China's land usage is limited to 70 years. If it is not renewed or does not get approval, then, theoretically, the land reverts to the state.

So the more acceptable method for old people is to sell their apartment and move to a cheaper one. Another way is living in retirement apartments and renting their own apartments out to provide income and cover the cost. The problem is that retirement apartment facilities are not good as of yet.

For this reason, some insurance companies are extending retirement business value chain, and have started to invest in retirement communities. For example, Taikang Life is building a retirement community in a suburb of Beijing, and Union Life is building a retirement health care community in a suburb of Wuhan.

For more, see Celent new report Pensions in China, Hong Kong and Singapore: Opportunities for Insurers.

This blog has been reprinted with permission from Celent.

Wenli Yuan is a senior analyst in Celent's Asia Research Group.

Readers are encouraged to respond to Wenli using the “Add Your Comments” box below. She can also be reached at wyuan@celent.com.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Opinion: Halbig Decision Creates New Level of Uncertainty for Obamacare

Time will tell if the Halbig decision remains viable. But in the meantime, a new level of uncertainty has been injected into the process.

CIOs: "We Don't Have Enough People to Run Our Mainframes"

Insurers will be competing with other industries for both legacy and “new IT" talent.

4 Ways to Keep Insurance Data Quality Healthy

Continually building trust and credibility in the data is the key to a successful data warehouse.

Customer Experience Trend Watch

Three recent HR moves demonstrate that large life insurers recognize customer experience as a strategic differentiator.

Insurers Have a Lot of Data, But Too Many Silos

Insurers actually have more data analytics resources than other industries.

Are Data Centers Shrinking or Expanding?

Today's data centers are doing far more with much smaller footprints.

Advertisement

Advertisement