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September 18, 2014

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‘I missed the full moon, so please pay me’

By Qu Zhi | September 18, 2014, Thursday | Print Edition

WHEN Wang Jia married Simon Wang two years ago, she got a diamond ring and an insurance as a promise of eternal love and responsibility.

With the premium, Wang can get back 100 percent of the insurance payout if the marriage fails. The policy lasts only one year; after that it must be renewed, rendering the purchase an economically dubious choice at best.

“Divorces are so common in modern society, especially when the man has a certain fortune. Not only celebrities but even some people I know have another woman,” the 27-year-old housewife tells Shanghai Daily.

With the increasing divorce rate and scandals of Chinese celebrities, searching for a sense of security in wedlock is one among many “innovative” insurance policies that are drawing great public attention. It is called “mistress-proof” insurance, and in Wang’s case she got her new husband to buy it for her.

During the past few years, insurance purchases in China have grown more slowly, and the overall penetration rate of all types of insurance is only about 3 percent, according to an early report by People’s Bank of China.

Premiums in China are less than US$278 billion a year compared with US$1.3 trillion paid in the United States and the UK’s US$330 billion.

Thus, many of China’s insurers are coming up with ever more creative ways to appeal to customers. Most of these policies are short-term promotions, and they offer insight into daily concerns — such as marriage and children. Most are sold on the Internet.

Some of the more outlandish policies include coverage against your bride becoming pregnant before the honeymoon; not seeing the bright full moon during Mid-Autumn Festival; your team being knocked out of the FIFA World Cup; or thick smog ruining your day.

“It’s a marketing tool to engage more customers. Some are just traditional insurance wrapped with eye-catching new names. On the other hand, some of the products violate the true function of insurance as something that is used to hedge contingent risks,” says William Du, manager of a major property insurance company in Shanghai.

For Du, the quirky insurance resembles gambling. Last year, Allianze China General Insurance Co Ltd teamed with Alibaba Group’s Taobao insurance and introduced a popular product — the “enjoying full moon” insurance. The insured could claim up to 188 yuan (US$30.61) if bad weather obscured the view on the night of Mid-Autumn Festival. Such a policy cost 99 yuan.

“Think about it: It’s just like you take a few dozen yuan against the insurer to bet whether the weather is clear. What possibly can you lose from not seeing the bright full moon?” says Du.

The insurer was in luck last year. The night was clear and it won the bet.

Because the premium is relatively low, most customers don’t care much about the result. Sam Tang of Shanghai says he purchased the “enjoy full moon” insurance last year “just for fun.”

During the recent FIFA World Cup in Brazil, ZhongAn and Ancheng offered policies allowing Chinese customers to buy protection against being attacked by football hooligans, who sometimes rampage and beat people while in a drunken state after or during a game.

The highlight was a “heartbreak” policy for when a customer’s favorite team was eliminated. Uptake wasn’t huge but the companies surely won plenty of media coverage.

Yet this is another product that is close to gambling. In June, the China Insurance Regulatory Commission said it would increase penalties for insurers selling products with “gambling or gaming” properties.

Last week, the China Insurance Regulatory Commission made the first sanction, fining and effectively shutting down a policy offered by People’s Insurance Group of China Co Ltd (PICC). The policy promised to pay out if the city’s air pollution index exceeded 300 five days in a row, if customers were hospitalized due to smog, or if tourists spent at least two days in a smoggy city. The policy was aimed at Beijing residents.

PICC was ordered to forfeit 500,000 yuan, 200 times the total in premiums it collected for this insurance.

“Some new insurance products don’t have clear provision, which easily misleads the customers. Insurers like this should be severely punished,” says Mike Wu, head of network marketing of an insurance company based in Shenzhen, Guangdong Province.

“The creative insurance products were first introduced by insurance companies in southern China mostly in Shenzhen and Guangzhou since they are more ‘open-minded’,” says Du.

Within less than two years, it prevailed in China.

“By selling the creative insurance polices online, you see potential needs of young people today and have more business opportunities,” Wu says. “Just add more fun to the policies while basically keeping the content, and you will have a lot more customers.”

For young families, there is an insurance for their children being too naughty. PICC offers a policy against “mischievous and destructive” habits.

The policy’s tagline: “Why not let us pay for the child’s fault?” It costs 44 yuan a year and provides coverage of up to 10,000 yuan for damage caused by an unruly child. A better deal gets 100,000 yuan of coverage for 194.6 yuan per year.

The policy is marketed with the buzzword xiong haizi, literally “bear kids,” meaning wild children to draw more attention.

“In fact, it’s just a kind of liability insurance,” Wu says.

There are also all kinds of popular policy innovations surrounding marriage. As the world’s second-biggest life insurer by market value, Ping An Insurance (Group) Co of China Ltd has offered an “accidental pregnancy before honeymoon” policy to cover the cost of having to unexpectedly cancel a honeymoon for pregnancy.

Last year, the company offered another policy where customers would collect if they got married in the 10 days leading up to this year’s Singles’ Day on November 11. The policies, which went on sale at midnight — included a 12-month membership to an online matchmaking site and sold out in 10 minutes.

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