China's insurance industry in 2020 saw strikingly divergent performances in different segments. On one hand, the epidemic pushed up demand for health insurance, but property and vehicle policies fell off. At the same time, regulators are taking action to stabilize the market and welcome private participants.

Online insurance firm ZhongAn said it found its health insurance sales surged during the past year, with premium income rising 115 percent year on year in the first half to a total of more than 3 billion yuan ($468.8 million).

Most of the new demand was for medical insurance policies. "Most queries were for health insurance and insurance for families," said ZhongAn Insurance deputy president and healthcare general manager Yang Nan, adding "the epidemic also pushed more consumers in lower-tier cities to make their first insurance purchases, for healthcare policies for themselves and for their families."

China's Banking and Insurance Regulatory Commission said China's healthcare premium payments rose by more than 17 percent in the first three quarters of 2020.

And the Chinese government has been supportive of the increased sales. Chinese Premier Li Keqiang said during a State Council meeting last month that the government should encourage commercial insurers to expand their product offerings as a supplement to public health insurance plans – a positive sign for the medical insurance sector.

Fall in other segments 

"Healthcare insurance is the only insurance product that benefited from the epidemic," said Su Fang, dean and professor of the Research Institute of Finance & Insurance, as stories of hardship and the importance of medical care shored up demand for health insurance.

Still, insurance premium income for the industry overall did not grow that much in 2020, and was largely in line with GDP growth. This means that while healthcare insurance notched an outstanding performance, other insurance products covering life, vehicle, and property policies were sluggish.

The divergent performance may have created some headaches for insurers, but experts said the overall performance of the insurance industry remains stable. To ensure that, China's financial regulators published new accounting rules a couple weeks ago to ensure companies remain able to meet their obligations.

"The new regulation says premium income, which the companies use for investments, can no longer be counted as part of their premium reserve," said Su.

Su said this means that insurance companies need to ensure their premiums are able to pay their claims. "The stricter regulations will lead more insurers, especially life insurance players, to run their businesses more conservatively," Su added.

Healthcare and elderly care have also been put into China's 14th Five-Year Plan (2021-2025), which will require more insurers to issue policies to supplement the public healthcare market.