Shanzhen Targets Aging Society: '50+ Non-Standard Risk Groups' as the Key to Unlocking Health Insurance Innovation

On November 4, 2019, the inaugural Lujiazui International Reinsurance Conference, themed “Win-Win Cooperation and Building a Global Community for Risk Governance,” officially opened as the most significant financial services supporting event within the Trade in Services section of the second China International Import Expo. Five of the top six global reinsurance institutions, including Munich Re, Swiss Re, and General Re, along with nine of the top ten global insurers such as PICC, China Life, and China Reinsurance Group, attended the conference. The Lujiazui Reinsurance Conference comprised two segments: an Insurance Forum and a Reinsurance Brokers Conference. Shanzhen, a platform dedicated to health services and risk management for middle-aged and elderly individuals, was the only internet technology company to host a sub-forum at the event.

On the afternoon of the 4th, Shanzhen successfully hosted the thematic forum on “Trends in Health Insurance Risk Control and Product Development in an Aging Society.” Mr. Zhao Lei, General Manager of the Reinsurance Department at the Shanghai Insurance Exchange, attended as a special guest. Other prominent figures from the healthcare and insurance industries were also present, including Xie Bangjie, General Manager and Chief Operating Officer of WeSure; Hou Wencai, Chief Actuary of RGA (Reinsurance Group of America); and Zhao Heng, Founder of Cunfu Riji, a medical insurance policy research organization. Together with Wu Hongxing, CEO of Shanzhen, and Hu Renzhi, CTO of Shanzhen, these experts engaged in a multidimensional exchange of ideas, examining the development trends of health insurance in an aging society from three perspectives: demand side, supply side, and medical policy interpretation.

According to data from the National Bureau of Statistics, in 2018, China’s population aged 60 and above reached 249 million, accounting for 17.8% of the total population (internationally, a country or region is defined as an aging society when more than 10% of its population is aged 60 or older). On average, nearly 25,000 people join the ranks of those aged 60 and above each day. By 2020, the number of middle-aged and elderly individuals aged 50 and above in China was projected to reach approximately 400 million. Furthermore, the “National Assessment Report on Aging and Health in China” indicates that by 2040, the proportion of individuals aged 60 and above in China’s total population will reach 28% (402 million). Another dataset from the National Bureau of Statistics shows that, taking 2017 as an example, the elderly population, comprising 17% of the total population, consumed nearly 70% of medical expenses. If this trend continues unchecked, the healthcare security system across society will face structural deficits in the future, rendering both national medical insurance and commercial insurance unsustainable.

In response to the immense challenges posed by an aging society, Shanzhen has proposed a solution that prioritizes proactive prevention over passive treatment. “The fundamental logic of healthcare cost containment is not to reduce claims payouts after diseases occur, but to replace treatment with prevention and substitute post-diagnosis medical services with health management services, thereby reducing the probability of disease onset at its source.” In his opening remarks, Wu Hongxing, Founder and CEO of Shanzhen, asserted that the future direction of health insurance lies in “services” rather than “finance.”

It is reported that since its establishment in 2015, Shanzhen has built a health service network covering 31 provinces and over 270 cities across China. Based on this network, it has provided comprehensive health services to 3 million elderly users, demonstrating not only professional service capabilities tailored to the middle-aged and elderly population but also gradually establishing a closed-loop capability for the “collection–processing–application” of Shanzhen’s health data. Furthermore, reports indicate that Shanzhen’s cost-containment strategy, which advocates replacing “passive treatment” with “proactive prevention,” has been put into practice. In early 2019, Shanzhen successfully joined the product development process for health insurance as a risk control and health service provider, leveraging its service and data capabilities to comprehensively empower the development of health insurance in an aging society.

In further discussing the development direction of health insurance for the elderly, Shanzhen shared a long-overlooked perspective, drawing on years of accumulation and research into health data of middle-aged and older adults by its medical and big data teams: Beyond the conventional understanding that this demographic generally suffers from poor physical health, their health status is characterized by significant individual variability and extreme complexity. Therefore, to achieve breakthroughs in the health insurance sector for middle-aged and older adults, it is essential to abandon the traditional underwriting model that applies a “one-size-fits-all” approach based on positive findings from medical examinations. For the “non-standard population,” namely the advanced-age group, risk control measures must be precisely tailored to each individual, and even to each of their independent physiological systems.

Data shows that 60%-80% of an individual’s lifetime medical expenses occur after the age of 60. In an aging society, the sharing of medical costs has become a primary social demand, presenting both opportunities and challenges for the development of health insurance products tailored to the elderly “non-standard risk” population. The Shanzhen team stated that, beyond design complexity, health insurance for the elderly requires a completely different strategy and system, whether in terms of pricing or market capacity. Future health insurance will be segmented by age: “standard risk” policyholders below the age threshold will continue to enjoy stable, low-cost coverage. For elderly “non-standard risk” policyholders, it is necessary to leverage risk control technologies to precisely define insurable scope for individuals, while matching corresponding health services to existing health abnormalities. This approach aims to improve policyholders’ physical health from the source, thereby ensuring the sustainable operation of health coverage for the “non-standard risk” population.

It is understood that as early as March this year, Shanzhen, in collaboration with the insurance industry, launched China’s first medical insurance product providing general medical coverage for seniors up to 80 years of age, adopting a “risk control + health services” model. This category was named “Senior Medical Insurance.” Policyholders of Senior Medical Insurance receive a complimentary health check-up with their purchase. Applicants whose check-up results are classified as “preferred risks” by Shanzhen’s Alpha precise risk control engine can enjoy enhanced coverage scope and higher sum insured. For those in the “non-standard group” who do not pass the health assessment, Shanzhen’s professional medical team provides tailored health management services to help users continuously improve their health status. To date, Shanzhen has jointly launched multiple senior medical insurance products with the industry. In terms of premium volume, industry recognition, and user feedback, Shanzhen’s Senior Medical Insurance represents a successful attempt at establishing a sustainable operating model for health insurance.

As a provider of risk control and health services for health insurance, Shanzhen will continue to iterate on these two core businesses. In terms of risk control, Shanzhen will release version 2.0 of its Alpha Precision Risk Control Engine next year. The upgraded engine will offer more refined identification of risks across human body systems, provide differentiated coverage responsibilities based on users’ physical conditions, and deliver comprehensive, continuous health protection for each user. Furthermore, after years of research and refinement, Shanzhen will launch health management services for all insured individuals next year. By tailoring health management services to different population segments, Shanzhen aims to gradually achieve the integration of healthcare and insurance, truly creating value for users and providing the insurance industry with more high-quality, end-to-end product solutions.