Taikang and Hurun Report today jointly released Retirement Planning and Healthcare of Chinese HNWIs 2016. This 48-page report is based on a study of 1125 High Net-Worth Individuals (HNWIs) across China, and 30 one-to-one interviews with HNWIs in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen. This is the second year of the report.
The result shows that interest in senior living communities rose 87%, especially among the under 35s, who jumped from 17% to 39%.
The creation of a ‘one-stop’ funeral services concept, with comprehensive coverage encompassing palliative care, religious beliefs and inheritance of family heritage and spirit is the future development trend for the HNWI funeral market.
Chinese ‘millionaires’ up 10.7%; Healthcare now biggest concern
A surge in housing prices in first-tier cities was the main driver for the growth in Chinese HNWIs, so that despite a slowdown in the economy, the number of Chinese HNWIs, defined as individuals with CNY 10 million of personal wealth or more (equivalent to US$1.6 million), shot up 10.7% year on year. As of May 2016, there were 1.34 million HNWIs worth CNY 10 million or more in the Chinese mainland, up 130,000 on last year, with a growth rate of 10.7%. There are about 89,000 UHNWIs (Ultra high net worth individuals) worth CNY 100 million or more, up 11,000 on last year, with a growth rate of 14.1%.
Guangdong overtook Beijing for the first time, home to 240,000 individuals with CNY 10 million or more, and the fastest growth rate, 17.65%. Beijing takes second place with an increase of 24,000, hitting 238,000 in total. Shanghai was third, increasing by 24,000 to 205,000. Zhejiang fourth with an increase of 14,000 to reach 160,000.
Bank deposits, property and insurance remain the three main avenues for financial investment. The proportion who invest in insurance increased, while the proportion devoted to property investment fell.
The main topics of concern for Chinese HNWIs was quite different this year. Healthcare took first place, displacing financial investment, which fell to third. Sports come second, with 29%. The HNWIs also expressed an interest in news and tourism.
95% believe that social security will be unable to meet their current needs.
95% of HNWI respondents with CNY 10 million or more own commercial life insurance. The average premium paid was CNY 37,000, suggesting that the total annual premiums paid by HNWIs was CNY 47 billion, or 4.6% of China’s total life insurance market.
95% of HNWIs buy commercial life insurance in addition to social insurance mainly because the latter has little relevance for them. Due to the minimal nature of the social insurance system, which provides only basic coverage to the population as a whole, it has little impact on the quality of HNWI lifestyle. Consequently it is not capable of meeting the high standards HNWIs require in terms of comprehensiveness of security, premium levels, investment returns, levels of satisfaction and personalized design. Commercial insurance, on the other hand, offers an effective means of overcoming the shortcomings and deficiencies of social insurance, allowing HNWIs more comprehensive and satisfactory coverage.
In short, HNWIs are attaching greater importance to commercial insurance due to the comprehensiveness of the security it offers. When evaluating the importance of commercial insurance, 78% of HNWIs indicated that it is very important or quite important, giving it an average of 8.1 points on a 10-point scale.
59% of HNWIs indicate that they will proactively seek to learn about commercial life insurance, a much higher percentage than last year’s 22%, further evidence of the manner in which HNWI interest in commercial insurance is on the rise.
With the rapid rise in HNWIs' recognition of and demand for new types of senior living homes, senior living communities are the preferred mode of retirement, with younger respondents most interested in them.
57% regard retiring at home as their first choice, followed by senior living communities, with 28%, and community-supported retirement with 8%. Though home retirement still accounts for more than half, the amount of respondents opting for it fell by 26%. The proportion of those choosing senior living communities climbed by 87%, especially among those under 35 years old, with this option rising from 17% to 39%. When it comes to the age at which HNWIs plan to move into senior living communities, the preference for 70 years of age remains the same.
HNWI attitudes towards retirement are becoming more open-minded and optimistic, as social perceptions alter. In retirement, they expect to lead colourful and relaxed lives, and to travel extensively. They are increasingly independent with regards to retirement planning, preferring to prepare through investment and insurance, rather than expecting their children to look after them. Accordingly, they expect to move into senior living communities or institutional care, not only to enjoy medical security but also to reduce pressure on their children, who already face tremendous social burdens due to the One Child Policy. Furthermore, with the rapid development of the senior living industry, there is more choice, and expectations that children ought to provide for their aged parents is on the wane.
Choice of medical institutions diversified, increased demand for new medical channels, tremendous potential for future market
Respondents would consider using 2.5 different kinds of medical institutions on average this year, up from 1.7, reflecting a diversification in choice. Compared with last year, as HNWIs understand medical information in greater detail, their attitudes are becoming more open, and the range of their choices more diverse. Many more are willing to use new medical treatment methods, with all categories witnessing increases.
Though the percentage consulting private doctors is very low at just 8%, this represents a 60% year-on-year increase, a trend is likely to remain on an upward trajectory. 10% of HNWIs have previously sought it in one form or another.
Its popularity is comparatively low, with about half of respondents never having heard of it. However there has been a significant increase in the proportion of those who have used it compared with last year, with the rate rising from 2% to 11%, reflecting a higher conversion rate among users, and reflecting a degree of market potential. Convenient online reservation and registration is the main reason cited for using it. Other reasons include the availability of electronic health records and making use of portable testing equipment at home.
The creation of a ‘cradle to grave’ concept, encompassing palliative care, religious beliefs and the desire to transmit values to the next generation, is an important trend for the HNWI funeral market.
Palliative care: this includes specialized and professional treatment, focusing on relieving pain and providing mental comfort, and the prevention of over-treatment. This method can not only reduce families' medical treatment expenses, but also calm patients’ nerves and relieve unnecessary pain.
Funeral services should meet spiritual needs: this involves developing differentiated services in line with the religious beliefs of HNWIs. 30% of HNWIs are religious, 23% of them Buddhists and 6% of them Christians, according to Hurun Research. Religious convictions are more common the older respondents get and the richer they are. More than 60% of HNWIs with CNY 30 million or above have religious beliefs. In recent years, the proportion of religious HNWIs has grown. These beliefs strongly affect their attitude towards and demand for funeral services, thus it is important for them to be taken into account.
Transmission of inheritance and values: it is envisaged that a combination of insurance and trusts will be used, to ensure that rules are in place to regulate inheritances, and to guide the values of the next generation in making use of their legacies. It is also hoped that the family’s values and mission can be passed on.
During the press conference, Taikang Life Chairman and CEO Chen Dongsheng said, “Retirement planning and healthcare has been the focus of Taikang, and is of huge value to humanity. I am excited that healthcare has become the main topic of concern for Chinese HNWIs. Taikang is now fully engaged in the development of ‘Big Happiness Project’, using the three core pillars of insurance, asset management and healthcare. The mission of Taikang is making people healthier, wealthier and to let them live longer. This is how Taikang can make people ‘happier’.”
Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report, said, “Nobody before has focused on the funeral needs of the Chinese HNWI, a key innovation in this year’s report. Social stigmas of retirement planning are also gradually shifting, such that Chinese HNWIs are willing to discuss the topic, especially with the recent health ‘craze’. I am delighted to put out this 48-page report in association with Taikang, China's leading integrated insurance group.”