Business / Industries

'House-for-pension' a new frontier for insurers?

(Xinhua) Updated: 2014-06-25 11:02

BEIJING - As China plans to pilot "house-for-pension" insurance as an eldercare alternative, insurance companies have expressed hope of forming a new though small territory in a nearly saturated market.

The "house-for-pension" program, a Chinese version of reverse mortgages, allows elderly clients to deed their houses in exchange for a certain amount of money every month. They can still reside in the houses until they pass away, when the properties will be auctioned to pay back their loan.

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To cope with rising pressures from its greying population, China will begin a two-year pilot program to allow insurance companies in the four cities of Beijing, Shanghai, Guangzhou and Wuhan to tap into the field from next month, according to the China Insurance Regulatory Commission.

Small companies have been among the first to jump on the wagon, hoping their products can win them a share of this new, unconventional market, which is not yet dominated by insurance giants.

A staff member with the Wuhan-based Union Life Insurance told Xinhua the company is busy developing relevant products with the aim of expanding services in the promising old-age insurance sector.

But considering experiences in other countries, the house-for-pension program may only be a niche market, he said.

Yang Qun, an executive with the Ping An Annuity Insurance Company, said such products mainly target urban elders with no children and limited means of livelihood. She estimated the number of potential costumers at 600,000 nationwide.

But Yang described the services as lucrative and said her company -- the pension management arm of Ping An Insurance Group, a major player in China's insurance market -- has been "actively" applying for a role in the pilot program.

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