China Life's Li Mingguang: Personal Insurance Industry Still in Key Development Phase

The Central Financial Work Conference pointed out that it is necessary to do well in the "five major articles" of technology finance, green finance, inclusive finance, pension finance, and digital finance, which have clarified the direction for promoting high-quality development of finance. In view of this, the "New Chapter of Finance" plans to specially launch the "New Chapter of Insurance: The Road to High-Quality Development" series of interview programs, conducting in-depth dialogues with insurance company executives to explore the path of high-quality development in the industry.

In recent years, the state has continuously introduced relevant policies, providing value adherence and direction guidance for the high-quality development of the insurance industry. The Central Financial Work Conference proposed the financial "five major articles", the Third Plenary Session of the 20th Party Congress proposed to deepen reforms in key areas of finance, and the new "National Ten Articles" systematically deployed the development of China's insurance industry for about 5 to 10 years in the future. How can the insurance industry write a new chapter of high-quality development under the guidance of national policies? This issue of "New Chapter of Insurance" dialogues with Li Mingguang, President of China Life Insurance Company.

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"The convening of the Third Plenary Session of the 20th Party Congress has sounded the charge for further comprehensive deepening of reforms. The plenary report mentioned insurance 13 times, clarifying the direction for deepening reforms in the insurance industry," as Li Mingguang said: "The insurance industry should take the Central Financial Work Conference and the release of the new 'National Ten Articles' as an opportunity, fully practice the original mission of serving the country with finance and serving the people with insurance, further play the role of economic stabilizer and social shock absorber, and contribute new and greater strength to achieving the goal of a financial power and serving the construction of Chinese-style modernization."

At the same time, insurance institutions implement the spirit of policies and move forward on the path of high-quality development. As the industry leader, China Life has always focused on its main responsibilities and followed national policy guidance. In this regard, Li Mingguang said: "China Life will continue to deeply cultivate the domestic market, give full play to the role of economic stabilizer and social shock absorber, continuously consolidate the development trend of stability and improvement, promote development, transform methods, adjust structures, and increase benefits through reforms, continuously meet the growing risk management needs of economic and social development and the people, and strive to achieve a high-level dynamic balance of multiple goals."

Adhering to the original mission, China Life has drawn a development blueprint for the next 5 years: "The next 3-5 years will be a key period for China Life to face the new era and build a world-class life insurance company, building new core competitive advantages. At present, we are planning the reform blueprint and roadmap for the next 5 years, with the core being to anchor the goal of building a world-class life insurance company, based on one point, strengthen five capabilities, and optimize two mechanism guarantees to continuously promote the company's high-quality development."

Looking forward, Li Mingguang is full of confidence in the development of China's insurance industry: "As an important industry in the modern economy and an important pillar of the financial system, the insurance industry has been continuously growing and strengthening in recent years, and China has become the world's second-largest insurance market. China's life insurance industry is still in an important period of strategic development opportunities, and the future development prospects will be broader, and another spring of the insurance industry has quietly arrived."

Serving the overall situation of the country and clarifying the direction of development, the insurance industry will usher in historical development opportunities.

Regarding the development situation of China's insurance industry, Li Mingguang pointed out: "In recent years, China's economy has continued to develop healthily, and the total economic volume has reached new levels. As an important industry in the modern economy and an important pillar of the financial system, the insurance industry has been continuously growing and strengthening in recent years, and China has become the world's second-largest insurance market. In the first half of 2024, the total premium income of life insurance companies reached 2.6 trillion yuan, a year-on-year increase of 5.1%, continuing the recovery development trend; the total assets exceeded 29 trillion yuan, showing strong growth momentum and development resilience.

Looking to the future, Li Mingguang said: "China's life insurance industry is still in an important period of strategic development opportunities, and the future development prospects will be broader, and another spring of the insurance industry has quietly arrived." Based on the above judgment, he further explained and pointed out the reasons:Firstly, the new positioning of insurance by the Party Central Committee has clarified the correct direction for the high-quality development of the industry. As a fundamental institutional arrangement in the modern market economy, the insurance industry will usher in historical development opportunities in the great journey of serving China's modernization. At the Central Financial Work Conference, it was clearly proposed to adhere to the political and people-oriented nature of financial work, to give full play to the economic shock absorber and social stabilizer functions of insurance, to do well in the "five major articles," and to develop the "seven major insurances." This is not only an important focus and main direction for the insurance industry to serve China's modernization but also the fundamental path to optimize and strengthen the industry and achieve high-quality development. On September 11, the State Council issued the "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry," which clearly defined the three main lines of strong supervision, risk prevention, and promotion of high-quality development for the insurance industry. It has made systematic planning and targeted arrangements for the reform and development of China's insurance industry over the next 5 to 10 years, which will surely promote greater achievements of China's insurance industry in serving China's modernization.

Secondly, the continuous recovery and improvement of the macroeconomy have provided a solid foundation for the high-quality development of the industry. In recent years, China's economy has continued to recover and improve. In the first half of 2024, the gross domestic product was 61.7 trillion yuan, with a year-on-year increase of 5.0%, and it remains an important engine for global growth. According to the "14th Five-Year Plan" outline, by 2035, China's per capita gross domestic product will reach the level of a moderately developed country, doubling that of 2020, and is currently in the interval with the greatest insurance growth elasticity. At present, China's per capita insurance premium is only 70% of the global average, and there is still a lot of room for improvement. It can be anticipated that with the recovery and rise of China's macroeconomy, it will provide a solid foundation for the industry's sustained growth.

Thirdly, the huge demand for insurance provides fundamental support for the high-quality development of the industry. China has a total population of over 1.4 billion, with the largest middle-income group in the world, and the demand advantage of the super-large-scale market is unparalleled. Especially with the continuous improvement of the living standards and life expectancy of Chinese residents, the people look forward to higher quality medical care, elderly care, and care conditions, and commercial insurance can play a greater role in meeting the needs of the people. With the in-depth advancement of national strategies such as Healthy China and actively responding to population aging, business such as endowment insurance, medical insurance, and nursing insurance will usher in new significant development opportunities.

Fourthly, the continuous standardization of the development environment provides a solid guarantee for the high-quality development of the industry. In recent years, regulatory authorities have vigorously promoted the industry to reduce costs and increase efficiency, transform and upgrade, especially the introduction of heavy policies such as "unifying reporting and practice" and the "Notice on Improving the Pricing Mechanism of Personal Insurance Products," which are of milestone significance in the development history of China's life insurance industry. The regulatory provisions are scientific, forward-looking, and systematic, which will effectively promote the industry to focus more on the main business, continuously standardize sales behavior, scientifically manage liability costs, and significantly enhance the ability to serve the real economy. All of this will provide strong support for the entire industry to be honest and trustworthy, to seek profit righteously, to be prudent and stable, to innovate while adhering to principles, and to comply with laws and regulations.

Faced with the current market environment, how will China Life layout future work? Liming Guang explained: "Looking forward to the second half of the year and the next period, China Life will continue to deeply cultivate the domestic market, give full play to the functions of economic stabilizer and social shock absorber, continuously consolidate the development trend of stability and improvement, promote development, change methods, adjust structure, and increase benefits through reform, and continuously meet the growing risk management needs of economic and social development and the people, striving to achieve a high-level dynamic balance of multiple goals." China Life will focus on the following work:

Firstly, serve the national overall situation and seize the development opportunities of the industry. Give full play to the unique guarantee function advantage of life insurance, further improve the initiative to support the Healthy China strategy and the national strategy for responding to population aging, continue to make efforts in risk compensation, health management, and health care services, and better promote the implementation of national strategies.

Secondly, take customers as the center to meet the insurance protection needs of the people. Focus on the insurance protection needs of customers throughout their life cycle, including "birth, aging, illness, death, and disability," as well as the growing needs for wealth management, health management, and elderly care services. Optimize the supply of diversified insurance products and services, improve basic services, strengthen value-added services, and refine health care ecological services. Continuously improve customer experience and enhance the sense of gain, happiness, and security of the people.

Thirdly, strengthen the linkage between assets and liabilities to promote the convergence of both ends. Actively respond to changes in the interest rate environment and customer needs, adhere to the convergence of assets and liabilities, and continue to promote business with diverse terms, forms, and costs. Further optimize investment strategies that match liability characteristics and increase investment in strategic emerging industries, advanced manufacturing, and new types of infrastructure to better serve the development of new quality production capacity.

Fourthly, adhere to innovation while maintaining principles, and further comprehensively deepen reforms. Resolutely implement the spirit of the third plenary session of the 20th Central Committee, comprehensively increase the intensity of reform, and focus on breaking through development bottlenecks in new fields, new momentum, and new models. Deeply cultivate resource integration and effectively leverage the company's customer, channel, and ecological advantages. Strengthen refined management and digital empowerment, accelerate the deep integration of new quality production capacity with the life insurance value chain, and comprehensively improve input-output efficiency.

Fifthly, prevent and resolve risks and firmly hold the bottom line of risk prevention and control. Accelerate the early identification, early warning, early exposure, and early disposal of risks, and shift to a comprehensive, proactive, and long-term risk management model, extending from "handling existing risks" to "preventing new risks." Strengthen duration and interest rate risk management, enhance proactive risk management capabilities, and continue to prevent and resolve potential and tendentious risk hazards.Leading Industry Development with High-Quality Growth of Its Own

The Third Plenary Session of the 20th Central Committee of the Communist Party of China proposed to deepen reforms in key areas of finance. For the insurance industry, how to implement the spirit of the Third Plenary Session and deepen reforms and innovations in key areas is a crucial question of the times. In this regard, Li Mingguang stated: "The convening of the Third Plenary Session of the 20th Central Committee has sounded the charge for further comprehensive deepening of reforms. The plenary report mentioned insurance 13 times, pointing the way for the insurance industry to deepen reforms. Among them, 'accelerating the development of a multi-level and multi-pillar pension insurance system', 'implementing a personal pension system', 'giving full play to the supplementary role of various types of commercial insurance', and 'accelerating the establishment of a long-term care insurance system' will become key areas for deepening reforms in the life insurance industry."

How does China Life implement the spirit of the Third Plenary Session and promote high-quality development of the industry? Li Mingguang pointed out: "China Life was born out of reform and has prospered because of it. Looking at the history of China Life's development, from 'shareholding reform and listing' to 'marketing system reform', we have always regarded deepening reforms as a key move to promote high-quality development, which has led to the company's growth—significantly optimizing development quality, greatly improving development efficiency, continuously upgrading development momentum, greatly enhancing the vitality and internal momentum of development, and completely renewing the company's development outlook, firmly consolidating its position as the leader in the market."

Looking to the future, Li Mingguang introduced China Life's future layout plan: "The next 3-5 years will be a key period for China Life to face the new era and build a world-class life insurance company, and to build a new core competitive advantage. At present, we are planning the reform blueprint and roadmap for the next five years, with the core being to anchor the goal of building a world-class life insurance company, based on one foothold, strengthening five capabilities, and optimizing two mechanisms to ensure continuous high-quality development of the company."

Based on one foothold means focusing on the main responsibilities and businesses, giving full play to the functional positioning of economic shock absorber and social stabilizer, and doing well in the "five major articles", opening up new and larger development spaces in the overall service of Chinese-style modernization.

Strengthening the construction of five capabilities. First, improve the ability of asset-liability management, strengthen the linkage between the two ends of assets and liabilities, making the "dual-wheel drive" more coordinated and stronger. Second, improve the ability to deliver products and services. Adhere to the customer-centric approach, continuously improve the professional level of channels and sales teams, strengthen classified and tiered operations, create an online and offline supply system, and serve customers with higher efficiency, lower costs, and better experience. Third, improve the ability to integrate resources. Further leverage the company's full-channel and integrated operation advantages, continue to promote the internal migration of customer resources; accelerate the integration of insurance + service resources, and create a distinctive health care brand of China Life. Fourth, improve the ability of refined management, strengthen the refined control of various costs, achieve more intensive and efficient operation, and better play the advantages of scale effects. Fifth, improve the ability of large risk control. Promote the insurance value from pure risk compensation to risk reduction management, drive product innovation, and expand the coverage of insurance services. Continuously improve the level of compliant operations and enhance the predictability and agility of risk management.

Optimizing two mechanisms to ensure is to continuously optimize the mechanisms for scientific and technological innovation, application, and transformation, and to continuously consolidate the digital "infrastructure", accelerating the deep integration of new quality productivity and company operations; further optimize the market-oriented incentive and restraint mechanisms and talent development mechanisms, attract and cultivate a group of core talents and leading talents in the fields of science and technology, investment, product actuarial, sales, risk control, etc., to provide a solid guarantee for the high-quality development of the company.

"As the leader of the industry, China Life will focus on the main responsibilities and businesses, strive to write well the 'five major articles', continuously deepen the supply-side structural reform, deeply explore new growth points, continuously upgrade the development momentum, and work together with all sectors of the industry to lead the industry development with its own high-quality development and contribute to the construction of a financial powerhouse." Li Mingguang concluded.

Taking the Central Financial Work Conference and the new "National Ten Articles" as an opportunity

To contribute more to the realization of a financial powerhouseThe Central Financial Work Conference pointed out that it is essential to do well in "five major articles" of technology finance, green finance, inclusive finance, elderly finance, and digital finance, clarifying the direction for high-quality development of finance. As Li Mingguang said: "Finance is the lifeblood of the national economy and is related to the overall construction of Chinese-style modernization. The Central Financial Work Conference held in October 2023 is an important meeting held at a critical period when China is fully building a socialist modern country, providing fundamental guidance and action guidelines for promoting high-quality development of finance in the new era. The conference first proposed the goal of accelerating the construction of a financial powerhouse, clarified the requirements for doing well in financial 'five major articles', pointed to the key areas of economic structure transformation and high-quality development, and clarified the direction for financial support for the real economy."

On September 11, the State Council issued the "Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry", releasing new opportunities for the development of the insurance industry. The new "National Ten Articles" proposed that by 2035, a new pattern of the insurance industry with a complete market system, rich and diverse products and services, scientific and effective regulation, and strong international competitiveness will be basically formed.

In response, Li Mingguang said: "The new 'National Ten Articles' follows the spirit of the Central Financial Work Conference and makes a systematic plan for the future reform and development of China's insurance industry. The insurance industry should take the Central Financial Work Conference and the release of the new 'National Ten Articles' as an opportunity, fully practice the original mission of serving the country with finance and serving the people with insurance, further play the role of economic stabilizer and social shock absorber, and contribute new and greater strength to achieving the goal of a financial powerhouse and serving the construction of Chinese-style modernization."

"China Life, as a financial central enterprise and industry 'leader', most of its business is closely related to the 'five major articles'." Li Mingguang further explained: "China Life is the earliest life insurance company in the industry to offer inclusive insurance business such as elderly insurance, rural small-sum personal insurance, and承办大病 insurance. By leveraging long-term capital and patient capital advantages, it takes serving the real economy as its fundamental purpose, continues to increase long-term capital support for green transformation, modern industrial system construction, and national regional coordinated development, effectively serving new quality production forces. It promotes the continuous improvement of comprehensive rural revitalization insurance services, providing risk protection for rural populations exceeding 50 trillion yuan. It actively promotes ESG practices, deepens low-carbon services and operations, and green development continues to deepen."

The Central Financial Work Conference emphasized that the insurance industry should play the role of economic shock absorber and social stabilizer, giving the insurance industry a clearer industry positioning in meeting the needs of economic and social development. Looking forward, Li Mingguang plans specific measures for China Life to do well in the "five major articles" with high-quality financial insurance services:

In technology finance, it is necessary to not only leverage the capital financing function of the insurance industry to provide risk protection for the transformation of traditional industries and help optimize and upgrade the industrial structure, but also to innovate risk protection functions and provide diversified insurance protection plans for scientific and innovative personnel.

In green finance, actively provide financial support for the research and development, investment, and promotion of clean energy, while continuously optimizing a package of insurance product services for green industry customers.

In inclusive finance, on the basis of continuing to provide insurance protection for specific groups such as farmers, the elderly, and women, efforts should be made to expand the coverage of insurance, and focus on the needs of new citizens, newly lifted populations, and newly insurable groups to further enrich and provide products and services, weaving a dense and strong insurance protection network.

In elderly finance, continuously enrich the product system with flexible payment and suitable protection with elderly attributes in a targeted manner, better meet the increasingly diversified needs of elderly finance, and further explore the characteristic protection model of "insurance + elderly care services".

In digital finance, accelerate digital transformation, enrich digital service supply, and improve the convenience, precision, and competitiveness of insurance services.The core of inclusive insurance lies in its universal benefit.

There is still a significant room for expansion in China's insurance coverage.

Developing inclusive finance is an important reflection of the political and people-oriented nature of financial work, and it is also a crucial path for finance to help achieve common prosperity. Regarding the implementation of inclusive insurance, Liming Guang pointed out: "Inclusive insurance is an important component of inclusive finance, and doing a good job in inclusive insurance fully reflects the political and people-oriented nature of life insurance, and also has high requirements for the professionalism of insurance companies."

How does China Life implement inclusive insurance? Liming Guang said: "China Life's inclusive insurance can be traced back to the small-scale rural insurance in 2008, making it one of the earliest companies to develop inclusive insurance in China. In recent years, we have strived to grasp the changes in population and social structure in the new era, and through expanding coverage and improving quality, we have made inclusive insurance an important support for people to have medical care when sick, protection when lost, and care when old. The company has historically served more than 600 million customers, providing multiple guarantees such as pension, medical care, and accidents for key groups such as the elderly, new citizens, flexible employment groups, and farmers. With the victory of the poverty alleviation campaign, to help consolidate and expand the achievements of poverty alleviation and effectively connect with rural revitalization, China Life has upgraded and developed 17 exclusive products for 'rural revitalization'. In the first half of 2024, China Life provided more than 50 trillion yuan of risk protection for 180 million rural people, paid more than 8 billion yuan to 2.31 million people, and effectively consolidated the achievements of poverty alleviation."

Faced with the core issue of developing inclusive insurance, Liming Guang explained: "I believe that the core of inclusive insurance lies in its universal benefit. Although China is already the second-largest insurance market, there is still a significant room for expansion in the coverage of insurance. For example, there are currently about 200 million flexible employment personnel nationwide, 84 million new employment form personnel, and nearly 100 million newly lifted out of poverty. The development of inclusive insurance is not only the social responsibility of life insurance companies but also an important new growth point for promoting industry development."

Therefore, Liming Guang pointed out that to promote the development of inclusive insurance in the future, it is necessary to adhere to the principle of economic affordability and commercial sustainability, and to grasp the following four key points:

First, establish a correct understanding of inclusive insurance and increase the supply of inclusive insurance. The development of inclusive insurance needs to focus on areas and groups that are not yet covered or insufficiently covered. By using new thinking, new data, new technologies, and new models, explore better business logic, optimize products, services, and processes, continuously expand the boundaries of insurance services, and improve the sense of acquisition, happiness, and security of the people.

Second, focus on cross-border cooperation and innovate risk control technology. To do a good job in inclusive insurance services, it is necessary to overcome the problem of insufficient experience data. Next, China Life will actively participate in and promote cross-border cooperation with relevant institutions, explore breaking through data barriers, improve the ability to identify, quantify, and prevent risks, and promote the expansion of the scope of insurable groups in inclusive insurance.

Third, promote in-depth integration of government and enterprise, and expand the coverage of "inclusiveness". From the promotion experience of "people's welfare insurance", the government is an important funding source for inclusive insurance, and strong credibility and organizational mobilization ability are also key to the rapid expansion of inclusive insurance. China Life has a good cooperative relationship with governments at all levels. In the next stage, we will further strengthen cooperation with governments at all levels, continue to explore and improve risk-sharing mechanisms, and do a good job.

Fourth, focus on technology empowerment to truly improve convenience. To do a good job in inclusive insurance, it is necessary to leverage the support of technology empowerment and improve the digital and intelligent level of insurance services, thereby maximizing the reduction of operating costs. For example, our Fujian branch's "Rural Revitalization Insurance" has provided inclusive insurance services to more than 8 million people in Fujian Province through technology empowerment. Farmers can participate in the insurance through their mobile phones, more than 90% of services are handled online, and compensation of less than 10,000 yuan is paid within 24 hours.The life insurance industry plays a significant role in the realm of pension finance, which is both its primary responsibility and a social duty.

In recent years, the degree of population aging in China has gradually deepened, with an increasing demand for elderly care and a broad prospect for the pension financial market. Effectively addressing population aging is crucial for the overall development of the country, and meeting the increasingly diversified pension financial needs is essential for achieving high-quality development in finance.

The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China first proposed to "accelerate the development of a multi-level and multi-pillar pension insurance system," which was included in the "14th Five-Year Plan," the report of the 20th National Congress, and the report of the Third Plenary Session of the 20th Central Committee. It has become an important measure in implementing the national strategy for actively responding to population aging. The State Council recently issued the "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry," which once again emphasized that the insurance industry should "do a good job in pension finance" and "actively develop the third pillar of pension insurance."

Regarding China Life's layout in the field of pension finance, Li Mingguang introduced: "China Life has always adhered to the political and people-oriented nature of financial work, continuously making efforts around pension insurance, elderly care services, and the elderly care ecosystem, and significantly enhancing the insurance protection capacity and service level. We have a rich system of pension insurance products, with nearly 4 trillion in various types of commercial pension insurance reserves, which can meet the pension insurance needs of customers of different ages, terms, and styles, safeguarding the pension 'purse' of the people; we have tailored multi-level insurance protection covering health, accidents, etc., for the elderly, and relying on the green channel for insurance claims for the elderly, allowing many seniors to receive 'medical money' and 'life-saving money' in a timely manner; online and offline aging-appropriate services have been widely praised, and institutional elderly care services have covered 14 key cities."

"Our country has the largest number of elderly people in the world today, and the continuous intensification of population aging will be a basic national condition. Promoting pension finance cannot be separated from the joint participation of the government, market, society, and family," Li Mingguang emphasized. "For the life insurance industry, doing a good job in pension finance is both our main responsibility and a social responsibility we should bear." He pointed out that to promote the high-quality development of pension finance, China Life will focus on the following three aspects in the future:

First, accelerate the development of the third pillar of pension insurance. At present, the scale of China's three-pillar pension fund accounts for about 10% of GDP, which has a gap with the global average, and accelerating the development of the third pillar of pension insurance is of great significance. As an important participant in the third pillar of pension insurance, commercial insurance should play an active role in meeting the diversified pension protection and cross-period financial planning needs of the people. Next, China Life will further accelerate the development of insurance business, including commercial insurance annuities, personal pensions, and exclusive commercial pension insurance, to continuously increase the pension wealth reserves of the whole society to actively respond to population aging.

Second, continue to enrich the product supply throughout the entire life cycle. Although the pension concept of Chinese residents is undergoing positive changes, those who actually start pension planning early are still a minority. Customer research found that among the people who have purchased commercial pension insurance, 58% are over 45 years old, and only about 19% are between 30 and 45 years old. In fact, the earlier pension insurance preparation starts, the more it helps accumulate pension protection. China Life will give full play to the professional advantages of insurance, develop and innovate various types of pension, health, and accident insurance products that are easy to apply for, flexible in payment, stable in benefits, and more diverse in benefit forms, according to different ages, different professional characteristics, and different risk preferences, to help customers plan for pension throughout the entire life cycle in advance and enjoy a rich and fulfilling later life.

Third, create a health and elderly care service ecosystem with China Life characteristics. The issue of elderly care is a comprehensive one, involving not only the preservation and appreciation of pension funds but also multi-level elderly care needs such as geriatric medical care, health management, and humanistic care. Insurance funds are true patient capital, and their long-term and stable investment attributes are highly compatible with the elderly care industry. Insurance companies have unique advantages in creating a "finance + elderly care service" model. Therefore, China Life will leverage the advantages of both assets and liabilities, focus on the multi-level pension needs of customers, connect the upstream and downstream industrial chains such as geriatric medical and health services and elderly care services, promote the coordinated development of the insurance industry and the elderly care service industry, increase the supply of high-quality elderly care services, focus on solving the problems of insufficient elderly care services and low service quality, and strive to provide customers with comprehensive pension solutions with China Life characteristics.