China Continent Insurance (CCI) has been rapidly expanding its pet insurance coverage options this year amid a booming pet economy, aided by an ageing population, more people living alone, and new technologies that reduce fraud.
Multiple product upgrades and an integrated pet insurance product released this year by CCI, a unit under state-owned China Reinsurance Group, offer higher limits for a wider scope of incidents related to pets. With help from fintech giant Ant Group, an affiliate of South China Morning Post owner Alibaba Group Holding, the company’s monthly pet insurance revenue surpassed 10 million yuan (US$1.5 million), said Li Shengpeng, head of CCI’s pet insurance branch.
“There’s no giant company in the pet economy yet, and the industry still has a lot of potential for all players,” Li said. “People in the industry are thinking about how to connect all the dots of different segments of the pet economy, and health care is a key [component] that may achieve that.”
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Some companies have been trying to attract more customers by offering insurance coverage for more of the pet services and products they already offer, according to Li. The government and hospitals, for example, are now discussing with insurance companies plans that cover pet cremation to meet tighter oversight of animals that have died during the Covid-19 pandemic, he said. This would be in addition to coverage for health care costs and pet-related damages or injuries that may require compensation to another party.
Keeping furry friends at home has become a more appealing option in China in recent years as the population ages and more people are either living alone or choosing not to have children. China’s pet economy is projected to reach 472.3 billion yuan (US$73 billion) by 2023, double what it was in 2019, according to Qianzhan Industry Research Institute.
“As the population ages and the number of individuals living alone rises, the emotional needs for having a pet are rapidly increasing,” said a group of Industrial Securities analysts in a July 6 report. “As the older population further expands, the pet economy will continue to grow.”
People aged 60 and older account for 18.7 per cent of China’s total population, or 264 million people, according to data released by the National Bureau of Statistics in May.
The number of people living alone in China is projected to reach 92 million this year, larger than the population of Germany, an increase of 19.5 per cent over 2018, according to Industrial Securities. This would account for more than 6 per cent of China’s total population.
Chinese consumers are also spending more on their pets. The average spending per person on a single pet in China increased 53 per cent between 2017 and 2020 to reach 6,653 yuan. That number is expected to grow further, according to Industrial Securities.
However, pet expenditures account for an average of 0.3 per cent of family expenses in China, lower than the 0.5 per cent in the US, the largest pet market in the world.
CCI primarily sells its pet insurance directly using its own sales team, through Ant Group’s Alipay, and on a few other platforms designed for pet owners
Alipay has been offering pet insurance from CCI since last year, when it started letting cat and dog owners register their pets with photos that identify the animals by their unique nose prints. The technology has an accuracy rate of 99 per cent, according to the company.
Beyond just making the sign-up process more convenient, the technology helps insurance companies rein in costs by cutting down on fraud. More accurate pet identification makes it more difficult for owners to try to get coverage for an animal that is not included on their insurance plan.
“Entrepreneurs came and left the pet insurance segment in the past 20 years or so during the rise of China’s pet economy, in large part due to the problems of insurance fraud,” Li said. “Now the technology breakthrough gives us hope, and we decided to invest more.”
As pet insurance has grown more popular in recent years, competition has been mounting. Hong Kong-listed ZhongAn Online P&C Insurance also offers pet insurance on Alipay. Other industry giants such as Ping An Insurance and tech companies like Tencent Holdings, through its WeSure Insurance platform, have joined the fray, as well.
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