Marketing Death: Culture and the Making of a Life Insurance Market in China

PUBLISHED : Sunday, 13 May, 2012, 12:00am
UPDATED : Sunday, 13 May, 2012, 12:00am


Marketing Death: Culture and the Making of a Life Insurance Market in China
by Cheris Chan
Oxford U Press

Marketing Death is a detailed study of how life insurance companies sell policies in a country where death is a taboo subject.

University of Hong Kong associate professor Cheris Chan hun-ching conducted dozens of interviews with insurance sales agents, their trainers and insurance buyers on mainland China. Insurance, a Western product, arrived in 1805 when a British marine insurer set up shop in Guangdong. By 1935, there were 166 foreign insurers and 45 domestic ones nationwide. Life insurance accounted for only a small share of the industry. After 1949, insurers gradually disappeared, denounced as products of capitalism.

In the late 1980s, the industry made a comeback. By 1992, licences were also given to foreign companies such as AIA, Manulife Group and Prudential. Yet public resistance to life insurance was strong at first: shops and offices in Shanghai posted signs saying, 'life insurance salespeople are not welcome'. People 'didn't want to talk about death or hear about misfortunes', writes Chan, who based her research on Shanghai in the early 2000s.

Chinese define 'a good life' as living well towards the end of life, and 'a good death' as dying while full of life. Sudden, premature death is frightening, so the topic of death is to be avoided at all costs.

Moreover, the mainland has its own long-established insurance-like risk-management practices, in the form of savings and kinship support. Many Chinese did not see the merit of saving and managing financial risks via an insurance product.

Despite these difficulties, life insurance grew rapidly on the mainland. Between 1995 and 2004, premium income grew by an annual average of 30.7 per cent, while life insurance penetration - its proportion of GDP - rose from 0.34 per cent to 2.02 per cent. Chan says the market grew because of the 'rise of the new modern life in China'.

AIA, the first commercial life insurer in China, faced no serious competitors upon its entry in 1992. Its first two products were personal accident policies, which stressed the protective function of life insurance. It trained sales agents to go door to door and tell people stories of misfortunes that befell families without insurance. It did not work: agents faced 'rejections, contempt, suspicion and even hostility'. Next, it offered a whole life policy that carried an incremental dividend guaranteed to be at least 3 per cent. The product did well and AIA secured 91 per cent of the total of 770,000 individual life policies sold in Shanghai in 1995.

AIA soon faced tough competition from Ping An, the Shenzhen-based newcomer, which recruited a large number of insurance agents, mostly women in their 30s and 40s, to reach as many people as possible through personal relationship networks.

When selling a policy for a child, the agents used the slogan of 'saving one yuan a day for your child', presenting child insurance as a smart savings plan. These strategies worked. Ping An's market share in Shanghai, the main battleground for insurers then, rose from 1 per cent in 1994 to 14 per cent in 1995 and 50 per cent by 2001.

People in the industry will find the book useful and credible thanks to the many examples and statistics it provides. But the general reader should not expect the book's content to be as dramatic as its title.