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Johannesburg – As healthcare reform becomes a core subject for the Chinese government, Discovery’s health insurer arm in the country, Ping An, has shown “staggering” growth since being officially rolled out two years ago.
On Tuesday, chief executive Adrian Gore, who was speaking at the group’s financial results announcement for the year ended June 30, explained that the company has great potential and there was increasing interest in products in the Chinese market.
“The focus of healthcare in China is remarkable,” said Gore. The capital requirements for the business depends on how Ping An wants to grow. “If it wants to grow rapidly, then it will require capital. The opportunity is massive and has come a long way.”
The acquisition is approaching profitability, said Gore. Since 2012, Ping An’s new business growth was up 75% since to R1 732m.
The group’s chief financial officer, Richard Farber explained that the first two years of the business involved “getting the basics right” by establishing hospital and doctor networks, understanding claims data and working with reinsurers. The personal insurance business was officially up and running from 2014.
Ping An's group cover sales were up 27% to 151m yuan (R317.5m). Individual cover sales were up 50% to 595m yuan (R1.3bn). The number of health insurance lives covered increased by 33% over the period from 418 000 to 555 000 at June 2016.
Read: Discovery is upbeat about China
Farber explained that Discovery saw an opportunity in that people would often save money to make co-payments for their healthcare, instead of buying healthcare insurance to fill those gaps.
“If someone gets sick, then people have to use their savings to make co-payments for the bits that aren’t covered by national health insurance,” he explained. What the Chinese government and Discovery aim to do is to get people to buy health insurance so that they do not have to use their savings.
“We think there is a huge market. There are 100m to 150m emerging middle class people that could buy our product,” he said.
Partner markets
Discovery is also focusing on partnering with leading global insurers to license Vitality in their markets. The group is developing a Global Vitality Network, based on its existing business model which incentivises behavioural change.
The group first started a joint venture with AIA, and now has partnerships in Singapore, Australia, Hong Kong, Philippines, Thailand and Malaysia, said Gore.
Generali was rolled out in Germany in June 2016, with the first sales occurring in July. “It has been an incredible period,” said Gore. The new business doubled the run-rate leading up to the launch. And the business will also be rolled out in France in 2017 as well as Austria.
John Hancock Vitality in the US continues to see strong adoption rates too. Manulife Vitality is expected to be launched Canada in September.
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