Core Insights - Longevity is a significant indicator of social progress and development, but managing and diversifying longevity risks presents new challenges for society [1] - Longevity risk refers to the financial pressure arising from individuals or groups living longer than expected, impacting pension and insurance obligations [1] - The commercial annuity insurance market, a tool for hedging longevity risk, faces substantial challenges due to the accelerating aging trend and interest rate changes [1][2] Group 1: Longevity Risk Overview - As of the end of 2024, the elderly population aged 60 and above in China is projected to reach 310 million, accounting for 22% of the total population [1] - The dependency ratio for the population aged 65 and above is 22.8%, indicating a growing financial burden on the working-age population [1] - The insurance industry is urged to adopt a multi-faceted approach to address longevity risk, including precise pricing and risk management [2] Group 2: International Practices and Innovations - In the UK, pension plans hold over £3 trillion in assets and are exploring de-risking solutions, with the market for risk transfer transactions expected to reach £70 billion by 2025 [3] - The concept of longevity risk swaps, where direct insurers transfer longevity risk to reinsurers, has been practiced in Europe since the mid-2000s [3] - Hong Kong's insurance industry is developing Insurance-Linked Securities (ILS) to transfer low-frequency, high-loss risks to the capital market [4][5] Group 3: Challenges and Recommendations for China - China faces challenges in implementing longevity risk transfer tools, including data availability, regulatory environment, and market maturity [7] - Recommendations include establishing a mortality index, conducting pilot programs under regulatory sandboxes, starting with simpler products, and fostering a supportive market ecosystem [7] - The development of a mortality improvement rate prediction model tailored to China's data characteristics is underway, which is crucial for managing longevity risk [8]

Core Viewpoint - Longevity is a significant indicator of social progress and development, but managing and diversifying longevity risks presents new challenges for society [2]. Group 1: Longevity Risk Definition and Challenges - Longevity risk refers to the risk of individuals or groups living longer than expected, leading to increased long-term payment obligations for pension and insurance institutions, thereby causing financial pressure [2]. - China has entered a moderately aging society, with the elderly population (aged 60 and above) reaching 310 million by the end of 2024, accounting for 22.0% of the total population [2]. - The commercial annuity insurance market, as a tool for hedging longevity risk, faces significant challenges due to the accelerated aging trend and the combined impact of longevity risk and interest rate changes [2]. Group 2: Long-term Insurance Business Challenges - The long-term insurance business is a core functional area for the insurance industry in addressing population aging, but it faces major challenges such as interest rate risk in a low-interest environment [3]. - The insurance industry must adopt a multi-faceted approach to manage risks associated with mortality, expense, and interest rate differentials, including precise pricing and risk management [3]. Group 3: International Practices in Longevity Risk Management - Mature markets like the UK are actively exploring pension de-risking solutions, with an expected market risk transfer transaction volume of £70 billion by 2025, including £50 billion in longevity co-insurance transactions [4]. - The concept of longevity risk swaps, where direct insurers transfer longevity risk to reinsurers, has been practiced in Europe since the mid-2000s [5]. Group 4: Local Exploration of Longevity Risk Diversification - In China, the exploration of financial tools for transferring longevity risk faces challenges such as data availability, regulatory environment, and market structure [7]. - Recommendations for improving longevity risk transfer in China include establishing a mortality index, conducting pilot projects under regulatory sandboxes, and developing simpler products to ease pricing and execution difficulties [7]. Group 5: Academic and Market Developments - The rapid aging process in China is pushing longevity risk to the forefront of actuarial considerations, with new models being developed to predict mortality improvements [8]. - The Shanghai International Reinsurance Registration Center is working on building a longevity risk index to support reinsurance transactions and product innovation [8].

Core Viewpoint - The implementation of the fourth life table by the National Financial Supervision Administration is expected to enhance the pricing accuracy of life insurance products, but it may increase the pricing challenges for longevity risk management in annuity insurance products [1][2][4]. Group 1: Life Table Implementation - The fourth life table, based on over 3 billion insurance policies, will be implemented starting January 1, 2024, and is expected to reflect the declining mortality rates and increasing life expectancy in China [1][4]. - The life table serves as a crucial tool for insurance companies to determine mortality rates and set product pricing accurately [3][4]. Group 2: Longevity Risk Challenges - Annuity insurance, which is primarily focused on survival benefits, may see price increases due to extended payout periods as life expectancy rises [5][6]. - The shift to the new life table may create price volatility, affecting both consumer willingness to purchase and insurance companies' premium income [5][6]. Group 3: Regulatory and Market Environment - The Chinese insurance market has a low market share for commercial annuity insurance, consistently below 6%, indicating a need for development in this area [7]. - The industry faces challenges such as low premium scale, high interest rate risk, and difficulties in managing longevity risk, necessitating the establishment of a dynamic longevity risk assessment model [7][8]. Group 4: Recommendations for Improvement - To address the challenges posed by low interest rates, insurance companies should focus on product design to lower liability costs and expand investment ranges [10]. - The development of a national longevity risk index and the encouragement of reinsurance companies to innovate in risk management are recommended to enhance the market ecosystem [8][9].

Core Viewpoint - The implementation of the new life table in China's insurance industry is expected to enhance pricing accuracy for life insurance products, but the growing longevity risk associated with annuity insurance remains a significant challenge [1][5]. Group 1: Life Table Implementation - The new life table, known as the "Fourth Life Table," will be implemented starting January 1, 2024, and is based on over 3 billion insurance policies, providing a more accurate reflection of mortality rates and life expectancy in China [1][5]. - The life table switch is anticipated to lead to different pricing effects across various insurance products, with term life and whole life insurance potentially seeing price reductions, while annuity insurance may experience price increases due to extended payout periods [5][6]. Group 2: Longevity Risk Management - Longevity risk, defined as the financial risk arising from policyholders living longer than expected, is becoming increasingly critical as China's population ages and life expectancy rises [2][4]. - The insurance industry is urged to develop a comprehensive and dynamic model for predicting and assessing longevity risk, which would enhance pricing and actuarial capabilities [7][8]. Group 3: Annuity Insurance Market - Annuity insurance currently holds a market share of less than 6% in China's life insurance sector, indicating a lag in its development compared to other insurance products [7]. - The low interest rate environment poses challenges for the sustainability of annuity products, as they are particularly sensitive to interest rate fluctuations, impacting both the payment obligations and the asset-liability matching [7][10]. Group 4: Regulatory and Market Development - There is a call for the establishment of a reinsurance market for longevity risk, which would involve collaboration between reinsurance companies and financial institutions to develop innovative risk management tools [8][9]. - Regulatory frameworks, such as the "regulatory sandbox," are suggested to facilitate the testing of new financial products and services in a controlled environment, promoting innovation in the longevity risk management space [9].

Core Insights - The aging population and increasing longevity are driving significant changes in the pension and insurance markets, necessitating a shift in focus from yield-seeking to functional solutions in financial products [3][4] - Life insurance companies are positioned to support the development of a high-quality pension system by leveraging their expertise in risk management, long-term capital utilization, and pension services [3][4] Group 1: Market Trends - The average life expectancy in China has increased by over 10 years compared to 30 years ago, with men averaging 85 years and women surpassing 89 years according to the latest life table [4] - The number of individuals aged 90 and above is expected to continue rising over the next 30 years, highlighting the need for robust personal pension planning [4][5] Group 2: Risks in Pension Planning - Two core risks in personal pension planning are identified: financial sustainability risk and care dependency risk, which are exacerbated by increasing life expectancy [4][5] - The low-interest-rate environment diminishes the growth potential of traditional savings, making it essential to secure stable, lifelong cash flows for retirement [5] Group 3: Product Development - Commercial pension insurance is crucial for transitioning from basic support to high-quality care, with a focus on innovative products that address longevity risk [5][6] - Insurance companies need to expand their offerings to include coverage for older individuals, particularly those with health issues, and develop specialized products for long-term care and income replacement [6][7] Group 4: Service Integration - The role of commercial pension insurance is evolving from a mere payment tool to a comprehensive service integration platform, linking various quality pension resources [6][7] - The aim is to provide a holistic service model that combines insurance, retirement communities, and health management for the elderly [6][7] Group 5: Company Initiatives - 恒安标准人寿 has been actively developing its pension finance sector, focusing on risk protection and long-term savings to enhance its product matrix [6][7] - The company has introduced innovative products such as the "Happiness to Old Age Long Life Version," which offers lifelong monthly pension payments, and has expanded its health insurance offerings to include cancer and disability income replacement [7]

Core Insights - The article emphasizes the need for a comprehensive retirement planning approach that addresses financial, health, housing, and inheritance dimensions due to the increasing longevity risk faced by individuals [1][2]. Financial Dimension - The financial aspect focuses on balancing "future lifespan" with "asset lifespan" through diversified asset allocation, ensuring that asset consumption does not outpace life expectancy [2]. - The current low-interest environment has led to a scarcity of safe investment options, pushing individuals towards riskier financial products [1]. Health Dimension - The goal is to extend healthy life expectancy to align closely with natural lifespan, which requires both basic health insurance and proactive personal health management [2]. - This creates new opportunities for the integration of insurance and health management services [2]. Housing Dimension - Early planning for retirement living arrangements and care resources is essential, as many quality elderly care facilities are in high demand [2]. - Assessing and modifying existing housing for suitability for elderly residents is also crucial [2]. Inheritance Dimension - Inheritance planning involves not only wealth transfer but also arrangements for elder care and asset management oversight [2]. - The concept of "designated guardianship" is highlighted, allowing elderly individuals to appoint guardians for their care and financial matters, which is currently underutilized [2]. Age-Specific Planning - Different age groups should focus on varying aspects of retirement planning, with an emphasis on starting early, saving more, and diversifying assets [3]. - Regular financial health check-ups are recommended for all age groups to adjust planning according to changing family and economic conditions [3]. - Risk tolerance generally decreases with age, necessitating a more conservative asset allocation strategy [3].

Core Insights - The forum discussed the responsibilities of the state and individual risks in the asset-based pension system, focusing on three stages: participation, investment, and withdrawal [2][4] Participation Stage - The main risk during the participation stage is low coverage rates, which can be improved by increasing the concentration of trusteeship and enhancing participation levels [2][4] Investment Stage - The investment stage faces issues related to the mismatch of long-term funds being invested in short-term assets. The government is responsible for improving governance structures, establishing a scientific investment management framework, and setting clear long-term investment goals. Regular publication of actuarial reports is essential for achieving these objectives [2][4] Withdrawal Stage - The core risk in the withdrawal stage is longevity risk, with a low proportion of annuity uptake in China. The government should encourage the purchase of annuity products on the demand side and develop a variety of tools and infrastructure on the supply side to enrich product offerings [2][4]

Core Viewpoint - The speech by Shang Jingguo highlights the limitations of domestic business models in the actuarial profession, particularly the preference for life insurance over pension insurance, leading to a shrinking annuity market and a lack of professional talent in the field [1][5]. Group 1: Actuarial Profession and Pension Insurance - Shang Jingguo calls for actuaries to explore the pension and commercial annuity sectors to address the professional gaps in international reinsurance risk sharing and longevity risk bonds in the international capital market [1][5]. - The shrinking annuity market is attributed to fewer participants and a lack of accumulated professional talent, which is exacerbated by the current focus on life insurance [1][5]. Group 2: Impact of AI and Digital Technology - In the context of global aging, Shang emphasizes the role of AI in managing longevity risk, suggesting that traditional actuarial pricing methods should evolve to incorporate more precise risk models that consider various factors [1][5]. - The focus on investment-linked annuities and variable annuities shifts the risk management responsibility to the insured, necessitating better management of policyholder expectations and risk matching on the liability side [1][5]. Group 3: Global Aging and Financial Tools - Shang suggests the exploration of more diverse global financial tools beyond reinsurance risk management, as the phenomenon of global longevity presents a larger sample pool for risk assessment [2][6]. - The potential for managing longevity risk through AI technology indicates significant growth opportunities for annuity insurance in the future [2][6].

Core Viewpoint - The forum highlighted the unique advantages of commercial insurance in developing pension finance, emphasizing its role in addressing longevity risk, long-term fund management, and product diversification [3][4][6]. Group 1: Advantages of Commercial Insurance - Longevity Risk Management: Commercial annuities effectively transfer longevity risk through actuarial techniques and a large pool of insured individuals, allowing for lifelong payouts and addressing insufficient pension savings [4][10]. - Long-term Fund Management: Insurance funds are stable and patient capital, with extensive experience in managing long-term asset-liability matching and risk control, which is essential for the capital-intensive and long-cycle nature of the pension industry [4][10]. - Product Diversification: The evolution of pension services towards home, community, and institutional care has led to a more refined and diverse demand for products, including various types of insurance that cater to different demographics and needs [5][11]. Group 2: Regulatory Support and Industry Development - Regulatory Focus: The National Financial Regulatory Administration is actively supporting the development of commercial pension insurance, with initiatives like the launch of dedicated commercial pension insurance trials in 2021 and their normalization in 2023 [6][12]. - Product Availability: Over 120 personal pension products are currently available in the market, reflecting the industry's response to the growing demand for pension solutions [6][12]. - Financial Contributions: By the "14th Five-Year Plan" period, the accumulated reserves for commercial pension and health insurance reached 11 trillion yuan, with significant payouts for health-related claims and the establishment of 130 pension community projects [6][12].

Core Insights - The release of the "China Life Insurance Experience Table (2025)" marks a significant innovation in the precise pricing of insurance products, serving as the fourth independently developed life table in China [1][2] - The new life table indicates a general decline in mortality rates across all age groups, reflecting the achievements in economic and social development, while also extending the financial planning cycles for individuals regarding retirement and healthcare [2] Group 1: Evolution of Life Tables - The first life table was published in 1996, with subsequent updates every ten years to reflect changes in population structure and mortality rates [1] - The second life table in 2005 highlighted the decline in mortality rates due to improved living standards and healthcare conditions post-reform [1] - The third life table in 2016 showcased a significant increase in average life expectancy due to rapid economic growth [1] Group 2: Implications of the Fourth Life Table - The fourth life table reveals a nuanced risk distribution, with notable differences in life expectancy between genders and varying rates of mortality improvement across age groups [2] - This data necessitates a comprehensive review and adjustment of existing insurance products by companies, as longer life spans will extend the duration of pension payments [2] - The phenomenon of "living with illness" will become more common, prompting insurers to expand their responsibilities beyond mere payout upon diagnosis to include health management and rehabilitation services [2] Group 3: Strategic Shifts in the Insurance Industry - Insurance companies must transition from being "financial compensators" to "risk management partners" in the context of longevity [3] - Providing integrated solutions such as "insurance + health," "insurance + retirement," and "insurance + technology" will be essential for managing clients' lifestyles and reducing claims risks [3] - The fourth life table serves as a guideline for the insurance industry to address longevity risks, encouraging companies to adopt a more open, precise, and innovative approach to meet evolving challenges [3]