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A large increase in niche insurance products sold online in China has worried some industry experts, who warned that these could be a front for illegal activities.
According to a report by Xinhua News Agency, one such insurance product targets gastronomic adventurers, paying out up to RMB1,000 (US$157) yearly for medical expenses, in case the policyholder suffers acute food-related sickness. The premium costs RMB9 (US$1.40).
Meanwhile, other products offer to cover sick pets’ vet bills, broken phone screens, and mishaps during cosmetic surgery. Other products have more outlandish gimmicks, such as covering celebrity marriages, World Cup bets, or unplanned pregnancies
The report added that over 12 billion insurance products were bought in China in 2017, or around double that of 2016. Accident insurance was one of the fastest growers, selling 1.6 billion policies, or a five-fold increase. Liability insurance was also a top gainer, with sales quadrupling to over 1 billion policies.
Several technology giants, such as Alibaba, Tencent, and Baidu, have taken note of the increased public demand for insurance, and have entered the business as well.
However, experts have warned consumers and urged caution when buying insurance online, especially from less-reputable companies, as these could be fronts for illegal fund-raising schemes.
Earlier, China’s insurance regulator released rules regarding the development of insurance products, including what kind of products should not be sold. These include insurance policies that are more akin to gambling due to their speculative in nature and have no substantive protective nature.
Zhejiang University professor Xia Xuemin has suggested that the government should create an official blacklist and credit rating system for online insurance sellers to verify their trustworthiness and weed out unscrupulous firms.
