Behind price competition lies, to a certain extent, new entrants' battle for existing market share.
"High-end medical insurance products that originally cost 10,000 yuan are gradually being downgraded to mid-high-end insurance products priced at 1,000-3,000 yuan, while the coverage scope of mid-low-end million medical insurance products costing several hundred yuan seems to exceed that of critical illness insurance costing several thousand yuan. When the entire insurance industry prematurely consumes the opportunities of 'consumption downgrade' and falls into 'price wars', a paradox emerges: raising rates makes products unsellable; maintaining low rates leads to low financing levels, making it impossible to significantly expand product coverage scope," an actuarial professional from an interviewed insurance company told reporters.
In the insurance industry, risk determines pricing, and pricing determines coverage responsibilities. Theoretically, compared to "standard bodies," "non-standard bodies" and elderly people compared to younger individuals are destined to pay higher premiums for commercial health insurance. However, as industry competition intensifies, under "price wars," more and more health insurance products continue to relax restrictions on pre-existing conditions, expand special drug catalogs, and lower deductibles, yet premium growth and pricing differentials are not significant.
Multiple commercial insurance experts and industry professionals interviewed indicated that the "price war" in the insurance market for people with pre-existing conditions has dual nature. While premature price competition may affect insurers' space to increase coverage responsibilities and innovate products against the backdrop of an insurance market for people with pre-existing conditions that still awaits expansion, it also indicates to some extent that the industry is gradually entering a stage of "more sufficient market competition." Meanwhile, as commercial health insurance companies improve their actuarial capabilities and increase risk control measures, "coverage responsibilities growing faster than premiums" does not necessarily mean insurance products will face operational risks.
**The Dual Nature of "Price Wars"**
Over the past year, multiple interviewed individuals indicated that one of the most obvious trends in the insurance market for people with pre-existing conditions is that some insurers originally focused on high-end medical insurance markets have gradually started developing mid-tier medical insurance. However, these mid-tier medical insurance products often differ little from the same companies' high-end medical insurance products in terms of covered population design and pre-existing condition coverage, with adjustments only made to coverage responsibilities.
Behind the "price war" lies, to a certain extent, new entrants' battle for existing market share.
Taking group insurance as an example, which typically requires no health disclosure and accounts for a considerable market share in the "people with pre-existing conditions" market, a group insurance business head from an interviewed insurance company mentioned that last year, social medical treatment demand reached new highs, with almost the entire industry experiencing sharp increases in claims payouts. However, many companies temporarily could not allocate more budget to support premium increases based on experience pricing for the following year, thus conducting public tenders. Additionally, many property insurance companies and internet insurance companies that previously had not deeply cultivated group insurance business gradually view group insurance as an important customer acquisition channel, leading to price wars in this previously "monopolized by giants" market segment.
However, a source close to Shanghai financial regulatory authorities proposed another perspective: there are over 200 insurance companies in the market, and if each company launches 10 products, the number of products in the market becomes very large.
The source further mentioned that the overall ecological competition in the current insurance industry for people with pre-existing conditions is generally healthy. "For example, in the first half of this year, an internet insurance company launched a mid-tier medical insurance product with no health disclosure and relatively low pricing." She stated that precisely because the premium scale of health insurance, especially insurance for people with pre-existing conditions, is still far from expectations, various market innovations should be encouraged, including both "conservative" and "homogeneous" innovations as well as "aggressive" innovations, with the latter potentially breaking existing health insurance product pricing logic and generating "ripple effects."
An interviewed health insurance industry professional similarly believes that for insurance for people with pre-existing conditions, customer purchase demands are similar, and product forms will be relatively similar. In this context, "controlling premium increase rates" can expand insurance products' leverage effects.
"Competition in the insurance market for people with pre-existing conditions is becoming increasingly fierce. While this brings challenges to insurance companies, it also 'forces' them to improve and innovate in key areas such as actuarial science, services, and comprehensive operations to address current challenges and explore future markets," the industry professional said.
**Insurance Company Operational Risks Not as High as Public Imagination**
Meanwhile, in the view of multiple health insurance industry professionals who communicated with reporters, although there is a widespread phenomenon in the current market of "product coverage responsibility expansion depth and breadth exceeding premium growth," the risks to insurers' sustainable operations are not as high as the public imagines.
On one hand, the opening of medical insurance, medical care, and pharmaceutical company data, along with the accumulation of insurers' experience data, provides more possibilities for actuarial calculations of inclusive insurance for people with pre-existing conditions. "A product may actually need to cover users with hundreds of critical illnesses and thousands of sub-health conditions. In the past, insurance for people with pre-existing conditions was expensive largely because insurers could not accurately assess risks," observed Wang Zhiwen, head of strategic customer department at Magiccare Health. Having experienced nearly a year of medical insurance data opening empowerment and strengthened drug-insurance integration trends, the insurance market for people with pre-existing conditions has entered a results output stage since the second half of this year.
On the other hand, in the triangle of acceptable prices, controllable risks, and responsibility expansion, insurers have mastered the art of "reconciliation." "Health insurance product prices are affected by the superposition of three factors: age, breadth and depth of coverage responsibilities, and the impact of medical insurance policies on claim trends. For these three factors, insurers will dynamically adjust specific conditions for triggering claims to 'control risks' through multiple channels. In recent years, with the development of insurance technology, especially after AI large models are applied to medical risk quantification, insurers can more accurately assess future medical expenditure levels for populations," Huang Kewang, vice president of Shangyong Technology, told reporters.
Deductibles are the core of medical insurance cost calculations. Against the backdrop of medical insurance payment method reforms controlling hospitalization out-of-pocket rates, multiple insurers have successively launched "zero deductible" health insurance products. However, some products' "zero deductible" only applies to "special drug responsibilities," while some products further specify "for medical expenses under 20,000 yuan, 50% reimbursement."
However, regarding how to enhance claim perception for people with pre-existing conditions after relaxing underwriting and approval thresholds, and how to explore whether people with pre-existing conditions purchase health insurance only to address current treatment burdens or to prevent the possibility of more serious complications and other health risks in the future, multiple industry professionals interviewed all indicated that answers to these questions relate to whether the health insurance industry caught in "price wars" can further escape the predicament of "one-size-fits-all" pricing and further explore and meet the differentiated needs of "people with pre-existing conditions," which still awaits further exploration and response from the industry.