China Reinsurance (Group) Corporation (1508) Earnings Call Transcript & Summary

Distinguished investors, analysts, ladies and gentlemen, good afternoon. Welcome to China -- 2020 China Re Investor Day. I am the moderator, Mr. Liu Shukai, who is the BoD Officer of China Re Group. Today's open day is about the life and health insurance. We are going to discuss the latest update of the health care insurance of China Re Group. I'd like to present to you all the distinguished management team from China Re Group. Mr. He Chunlei, President of China Re; Chief Actuary of China Re, Mr. Tian Meipan; and Business Director of China Re, Mr. Li Ming. We also have a special guest with our strategic partners. They are: Mr. Zhang Xiaodong, Founder and CEO of Meditrust Health. And we also have Mr. [ Giselle Chow ] with us today, who is the Founder and CEO of [ Insurance Today ]. Today's open day is going to be divided into 4 sessions. The first session is the welcome address. And the second part is about the status quo of China Re Insurance market in China. We are also going to introduce you the studies. Thirdly, we are going to have a panel discussion. We invite Mr. [ Colwick Hall ] to be the moderator for the third session. And we have also invited Mr. Zhang Xiaodong from Meditrust together with Mr. Zhang too from the China Re Life Insurance to discuss the future of the health care industry. And for the fourth part, we are going to open up the floor for questions. So we are going to enter into the first session. So Mr. He Chunlei, the floor is yours.

Distinguished ladies and gentlemen, good afternoon. Today, it's my honor to gather online with investors and analysts from across the world in this special event of China Re Investor Day. On behalf of China Re Group, I would like to show our warmest welcome to all the distinguished investors and analysts. Currently, under the -- due to a -- between proceeds in the market, our commercial and health insurance is welcoming all kinds of the new opportunities. From the policy perspective, the '19's panel recession has put forward a quite clear requirement to the healthy China construction. It opened up new spacing in the top level designing, primarily curtailed -- has allocated different measures in the State Council's Annual Meeting on the December 9. And as Vice President of CBRC has pointed out in the CIOs meeting that we are going to accelerate the healthy development of the commercial insurance. This has pointed on the directions for the development of health insurance. From demand side, the current COVID-19 is still rising heavily across the world. And with a green population pricing of GDP per capital more than USD 10,000, all of these multiple factors is going to continue to incentivize the healthy development for health insurance. Although the healthy insurance -- health care insurance premium has a compounded growth show of 35%. But in 2019, the health care insurance is only accounted for 3.61%. While Europe and Japan and America, they have around 10% of the total market share. That is to say, we still have a quite promising room for the future development. During the transformative process, China Re Group as a major group for the reinsurance it has played a very important role. First, it has stabilized the supply for insurance as the major players for the health care insurance and reinsurers. China Re Group has steadily fast promoted the domestic type of the business. The total undertaking fee has been going up from RMB 3.64 billion to RMB 17.05 billion. The biggest share has been going up from 60% to 31% while the health care insurance has always been capped at about 40%. Second, we kept promoting the infrastructure construction. China Re Group starting from 2011 has participating in the infrastructure construction work for the critical disease and also the life indicators. It is participating in the editings and re-editings of the critical disease. It has built up the first core data base. For the industry and it created a large industrial data becoming an important participant. Thirdly, China Re has also actively promoted the industrial service. And our historic experience has demonstrated the critical disease and in France, among other different insurances of breakthrough for the reinsurance. In the recent few years, China Re Group has used its own advantages in the design of the insurance innovation projects. It also worked together with the insurance companies to go forward the first product in the market about the cancer and oncological disease cancer. It has setting an example of the Medicare health. By working together with Meditrust we have builded up a special market of product plus drug, pioneering into the field of health care insurance together with the new drugs and new medical equipment. Fourthly, we have intensified the healthy development for the risk proof industry. Reinsurance industry is more sensitive to the industrial risk and cyclical changes. It enables us to evaluate the risk of the insurance market in a more objective manner through scientific pricing and adjusting of the price, we have efficiently guided all the product to be completed at its maximum about the potential risk. China Re Group has always stick to stable growing, restructuring, risk proof and efficient increasing. We have been optimizing the mechanism. We believe that with our professional know-hows long-term database and also the insight understanding to the domestic risk, China Re Group is still going to continue to provide a very stable undertaking ability to insurance industry about its product, technology and infrastructure and providing a healthy contribution to the health care channel. At the same time, China Re Group has been the largest reinsurers in the health care insurance market. We are going to accelerate the new priorities for the China Re Life Insurance partner. As a listed company, China Re Group has always been emphasizing the interactions with the capital markets. Today, we have prepared the Investor Day to update you the latest development of the health insurance. Moving forward, we are going to innovate and creating more values for the shareholders, for the societies, and we hope all the investors and analysts could support China Re Group in the future.

Thank you, Mr. He for your remarks, I would like to invite Mr. Tian Meipan, the Chief Actuary, to start his opening up speech.

Distinguished ladies, dear friends, online and off-line, good afternoon. Before my report, I'd like to share with you something. I have a friend own to a cardiovascular disease. The doctors put a stent on his blood vessel. And after he find that the price for the stent has dropped from [ 30,000 to 700 ]. It's like that he want to do it again. That is a very important question that we want to talk about. The market and the outlook for the health care market. The health will enable the health care market to be the payer. How do we emerge the commercial interest together with the medical insurance? So to be frankly, who is the payer for the health insurance? In the past, we all know that the prescription of drugs has been decided by the doctors and hospitals. We think the pharmaceutical companies and also the medical device companies, they have to bribe the hospitals and doctors. But after the reform in the health care industry, we can see that these strong insurance health insurance market has been becoming a very important player. So moving forward, the insurance industry is also going to be the payer. That is from the topic that I want to say. And we also mentioned further better emerge ourselves in the medical practice. It is a very difficult question, but I believe the most important part is that we should talk to the medical practitioners. I find the practitioners in the medical world to know what we are doing, and we're not understanding what the medical practitioner is doing. I have been participating in a lot of medical practitioners. They don't know what they are doing and -- they don't know what we are doing, and they don't know what we are doing. Sometimes, the words are not communicable. So the most important party that we should have the platform to share with each other. Today, my report is going to be divided into 3 parts. The first part is the city school. Second part is the problem. And third part is that how we will generate grab this opportunity and so forward more thinking. First, the status quo. The record development of the health insurance market from the general practice. The premium in 2014 has been growing from 30% annually, and we have estimated that in the coming 1 to 2 years, the total premium is going to be grown by RMB 10,000 billion. And for the critical disease, new premium has grown by 32% annually. And at the end of 2018, the critical disease has also grown quite rapidly. In 2019, the total premium has reached to [ 30 billion ], and we estimated that until the 2021, the total coverage ratio is also going to be [ 150 million to 200 million ]. So why do we have such a rapid growth? What is the growth momentum behind it? The first part is the growth of the economy. The second part is the supply side reform. People suffered from the difficulties for registrations in the hospitals. Thirdly, we could see the innovation drugs and innovative method coming up one after another. We have seen some electronic methods treating the cerebral glucose. And we believe that always is running up the need for the health insurance. From the external part, we could also see a lot of reports. The occurrence for the social event. We all have watched the movie of the -- some of the people suffered from the critical disease, they cannot receive because of the high medical price. And I believe that we have opened up the requirement for the inclusive medical requirement. We could say that the medical insurance is closer to our day-to-day practice. It is far away from ours. The medical price is not that adaptable to our daily practice. Though we have a very good channels, together, we used up the agent. But I believe that for RMB 200, that's far from enough. For example currently we have some of the online method, which enables the inclusive insurance to be appeared. At the same time, we could see the health care insurance growth. And one major reason behind it is the promotion for education. For example, mutual health and also surety among other different voluntaries and indomitable applications. This has improved the awareness for the health care. At the same time, we also have a large reform for critical disease. The reiterations for the critical disease. And we have also a lot of development. We've promoted different channels. At the same time, we have a lot of clinical support. I'm not going to elaborate one by one the definitions for critical disease, among other different definitions. So we could see here what are the new opportunities. We believe that new opportunities lies in the aging population. And we believe that 20% of the aging group is actually going to consume 20% of the medical resources. Second, with the whole society, the personal payment is accounted for 28%. That is the insurance company's awareness. We could see that for the insurance in 2019, we have paid around [ 23 million ], and we still have a very huge room for development with the coordinated development between the commercial industry and these medical insurance world also have a interest. The rising of the medical insurance and the general consumption creating a large hurdles for these factors and it also happens to the health care industry. We hope that the medical institutions and insurance institutions could develop it together. The multiple guarantee wins and also the long-term appearance for the medical insurance means that this -- there's a lot of opportunities. So are there any challenges? The first challenge is that the imbalanced brochure. The critical disease and also the heavy disease is consuming around 50% of the health care insurance. There is no long-term palliative care. We used to think that we should stay at home until the end of our day and some of the people use the deposit to tackle with the problem of aging. And in the long-term caring, there is actually no long-term caring. We have not considered it. The true long-term caring is after 17 years old. So from another perspective, the supply side, we cannot match the demand. For example, for the critical disease, the leverage ratio is actually quite low. That is to say, you have your own problem, and you should not bribe the industry itself. Actually, the general public, especially the Asian and the Chinese people, they hope that they could cover their cost. And for this type of the insurance, it is more similar to the deposit structure. The current critical disease insurance is not focusing on the critical disease, it is actually focusing to satisfy the client. And if our insurance industry has been capped at that level, we should have a very high leverage ratio. Second, the long-termness of the insurance sector. And we have also been reminded of these moments of the medical sector. Some of the medical insurance has only guaranteed the health insurance health people they don't ensure the diseased people. And we have also suffered from the problems of the long-term care. We have the clinical disease, and we also have some of the sectors, which is not being covered by the insurance. For example, the [indiscernible] and also the dental department. So the insurance product should be in line with the new environment. Actually, what is the future direction for the health care insurance sector? The internal values should be guided. So what is the internal value? I believe that we should consider about the insurance interest gap and the massive skill insurance. And guided by that, it generated the focus of the market the major disease and also the insurance project. And the other different product is actually also being defined according to this. We have never heard that the medical insurance should be designed at this level. So what is the responsibility for the medical insurance? They are used to maintain the channels. They are used to get more clients and insurance deposit. If our future environment could be supportive to this structure, I believe that moving forward with the reform of the technological sector and also with the continuities for the different channels is actually going to create a lot value. So moving forward, the producers from different channels and with the increasing of the insurance is actually promoting the in-continuity of the insurance products. it comes from the top level designing. It comes from the drivers behind it. We also mentioned the company's long-term operation, which is similar to that. At the same time, we need to manage. We actually lacked detailed management. The design has not been going into details. For example, in the medical insurance, we have a lot of subsidies. We don't have the subsidies. And for the critical disease, we have not defined the mild cerebral stroke. And we also have problems, including the payment. And also, we are still lacking enough database and enough information for the behavior among other different sectors. At the same time, we should look at the commercial insurance. Should we separate it? It actually increase the difficulties. This has promoted the development for the industry, but actually, commercial insurance is very closely related to that. In our hospital, we have been always mentioned about should we care about that. And some other, should we use the commercial insurance if you don't have any commercial insurance, it's also going to be -- it's going to be covered by the social insurance. We have a lot of different gaps, including the second time diagnosis, and we don't have a larger in-depth integration. So the integrations with the medical world is actually bad -- is actually worse. We are paying the money, for example, for the critical disease. And at the same time, we can see that the most important obstruction is that we only guarantee. We only insure the health people. We don't insure the patient. So the medical institution looked at us in a quite weird manner. So who is at the prescription? That is to see the medical industry, it's actually looking at us in a very quite reiterate, and we have a lot of strategies from the top level designing. We are going to stick to the surety projects. We believe that the health care insurance is going to be one of the cause for the surety product. Top level designing is very important. The second part is the supply side reform. Moving forward, we are going to develop a series of the products, including the products to the critical disease and also the inclusive financial products. And also the insurance products for the new generations. We're also going to develop the new insurance and gradually fill the gap in the market and form a secondary market, including the dental clinic. We are also going to consider about that. Freezing the new opportunities, we are going to work further with the platforms to develop a long-term medical insurance. And also, together with the governmental platforms, we are also going to develop the inclusive insurance. We are also going to step up the constructions in the data. In terms of the strategic investment, we are going to use the health insurance. So from the strategic design, the current investment is actually a hot spot topic. And from the business perspective, the investment can be divided into several different fronts. It is a key. It is a window for us to understand the medical world. It is also going to make a platform where we are going to enhance the communications. And thirdly, it is also going to be helpful to the healthy development for the medical insurance and medical work it is also to digest more traffic to the invested company. This is actually a business strategy. And our collaborations with Meditrust also increases such a feature. The innovation and payment, it is one of our basic industry investment. So why do we talk about the Meditrust? Why do we develop such a very good product? It includes the consumers, and it includes the pharmaceutics. Before some of the pharmaceutical companies, they cannot provide the maximum quality for the patients who are in urgent need of that. For consumers, even if they have the money, they cannot buy the drugs, they cannot buy the medicines. It's actually addressing the problem between the supplying side and also the demand side And the payment work. Moving forward, the problem is also going to be divided into 2 parts. We are going to elevate the method that we are doing. And moving forward, we are still considered how to innovate more products and how do we make a better and wider world for the peripheral business, including gene editing, and how do we emerge with the industry. So for the emergencies of the industry, we should innovate the payment. For example, we should ask first 1 patient to run a hospital. And the second part is vertical integration. We have our own way of thinking, including the emergencies between the medical world. In the medical world, for example, we are actually happy with the private hospitals. I believe the integration for us is actually letting us to understand the pain point of the medical world. We should understand the doctors and also understand how the hospital works and the pharmaceutical world also works at the same manner. Our problem is not to address the pain point for the 2 sites. And I believe that this is our actually a very basic introduction. And these are some of the current thinking, and I believe moving forward by exploring the whole industry is going to have a quite rapid development. And it's also going to bring us the new growth in point for the whole health care insurance asset.

Thank you very much, Mr. Tian Meipan for your insightful speech. We are going to start the panel discussion. Before the official start of the panel discussion, I'd like to present to you these 2 distinguished guests: Mr. Zhang Xiaodong and Mr. [ Giselle Chow ]. Mr. Zhang Xiaodong is the Founder for Meditrust and also CEO for Meditrust. He has a AMC of the medical chemistry from Chinese Academy of Science. Mr. Zhang Xiaodong used to work at the core part for Boston Consulting, and he is also leading the fundings for the Shanghai Pharmaceutical Group. He has also been working as a Co-Founder of the Shanghai Cloud Pharmaceuticals. In 2017, Mr. Zhang Xiaodong founded the Meditrust and he has been collaborating with medical insurance institution, covering over 300 cities. And his service has been provided to over 300 institutions. Mr. [ Giselle Chow ] is the Founder and CEO of [ Insurance Today ]. And he is also the General Editor for Insurance Today. Mr. [ Giselle ] was graduated from Business Technology and Business University. He has been servicing -- providing his services to a series of the domestic media. And is also the Chief Editor. Mr. [ Giselle Chow ] has been focusing on the observations of the insurance industries, and he is really good at researching into different samples. And he has acquired unique understanding for the insurance industry. Now I give the floor to the 4 speakers I'm going to give my to Mr. [ Giselle Chow ] who is the moderator for this session.

Ladies and gentlemen, its real honor to moderate this afternoon session. And I am really honored to talk to Mr. Tian Meipan, Mr. Zhang Xiaodong and Mr. Huiqiang Zuo to pioneer into the health insurance. So the first question is to Mr. Tian. During your speech, you have precised once again about the supply side reform. For the industry, we think the inclusive health care insurance has been one of the major driver. Can you share with us what is the pain point for the industry? Which are the different factors that -- of the health care insurance that is making up with the national demand?

For the time interest, I'm not elaborate on that. First, there's a lot of problems for the product. We should think about it from the product perspective. Sometimes, the products are not being satisfying from the general public's demand. First, the products don't have enough leverage. Because it is a deposit-based leverage. Second, it is lacking some of the long-termness. Although in the market, we have several different long-term products, I believe the supply has not been enough. Thirdly, we need to think about the coverage of the population, the aged population and the elderly group has not been -- their demand for the product has not been up. And for example, for the millions of the health care, it has been provided by the patient department in the public hospital, and we should not get the market to provide this product. Second, for the different products, we have some of the brands to field, for example, for the outpatient department, it is actually liking. And for the different factors, we need more future development. So what is the product that is actually in line with the general public's demand? First, I think it should be inclusive for China's general public's consumption manners. The general public don't want to buy high-end products. They lack the consumption power. Second, we should look into the long-termness. And fourth, we should fill the blanks. For example, I mentioned about several different departments, including the dental department and department. We hope to provide the satisfying products to the general public.

Thank you very much, Mr. Tian, for your analyzing. And you have mentioned about the pain point for the medical insurance sector. These are the future developments and future directions. We have a consensus in the industry. The integration between the health care insurance is going to be the future direction. We also know that China Re has done a lot of generosity in this sector. Can you give us a more introduction?

From the practitioner perspective, in the recent few years, we are not doing too much. But together with Meditrust, we have made a payment industry. And currently, standing on this point, I believe it is a very successful product. We have made it wider and deeper. And for the integration for the different industries, we should think that the pain point for other people, can we address the problems for the Medicare and also the health care? These are the most important parts. Based on that, we have do some of the thinking, including that, together with the medical works, starting from the doctors, starting from the hospitals, how do we integrate? For example, for the private hospital and for the segment market, how do we integrate with them? And for the medical world, how do we integrate with them? We should innovate the payment. And the consumption channels for the medical world should include. Some of the footage that is on 5, 4 important institutions. At the same time, we should also consider the integrations with the health management. We should think about the patients. If the patient can deliver some of the products. And for the chronic disease management, and we are always thinking about that. At the same time, in terms of the investment, through the equity investment, we hope that we could integrate the different parts of the business. I believe the integration is comprehensive. If we have a lot of resources to be introduced, we are willing to discuss with you about the future direction.

Thank you very much, Mr. Tian, for your kind sharing. And you have given us a lot of experience, and we like to give to the second question to Mr. Zhang Xiaodong. This year, there is a very important news. And I believe that China Re Life has invested Meditrust. That is a huge news in the industry. And I believe Meditrust has pioneered in this sector. Can you give us a brief introduction of the business models of the Meditrust? What kind of new application scenarios?

Thank you very much, Mr. [ Giselle ] and thank you very much to Mr. Tian. Today, we're honoring to participate in the China Re Investor Day. I play for Meditrust we were founded in 2017. At the time, we positioned ourselves as a medical payment experts, not from the insurance sector, but from a medical practitioner's perspective. Across China, in 2020, I estimated that the total medical insurance industry, the total payment industry is going to be surpassing RMB 4 trillion. Under the scale, the medical payment is about RMB 2 trillion commercial payments with all the different statistics. The self payment is actually accounting for 45% to 48%. The last of the 4 -- 3% is being to the life insurance. Since its first day of the Meditrust, we have been thinking that such a huge self-payment market. Where will the general public and who is going to pay for that? In the past, we think that in China, we believe that if you get the disease, the disease should be paid by the national government. And we believe that it is also going to be included. In 2019, the insurance in negotiations, and last week, it is generating a lot of bad feedback in the medical insurance. The medical insurance has a quite limited funds. What kind of role commercial insurance is going to play in the future? We hope that innovation could be included. And to put it simply, we are going to serve 2 groups of the people. The first group of people is where the medical insurance people don't cover. And this year, we are going to cover around 15 million people. And through our platform, we've actually paid around 5 million to 100 million. We actually received a lot of cost. And through all kind of medical for those patients who have not bought the commercial interest. Second, by combining with the insurance, we found that for the long term, the supply side of the insurance poses a lot of problems because we are liking the data and we cannot combine with the insurance industry and insurance sectors. These are the alliance with the China Re Group that we are going to build. We are actually serving around 40 different insurance companies, and we have listed around 800 different insurance companies. It incorporates the China Re Group. And we're actually going to cover a lot of high-quality insurance product. Moving forward, if the insurance product can serve and can cover a lot of areas. And we also want to discuss with the areas that the disease is covered, special disease, oncologic drugs, these are general public needs most. As Mr. Zhang has mentioned, our collaboration with China Re has also been extended to the clinical disease. With the general consumption, the original and innovative drugs is also going to come on. Recently, we believe the vaccine is also a quite important topic. Consumables is also some of the products that we have discussed. In the past 2 years, Meditrust has got our online hospital license through the construction. We are also going to build a specialized hospitals. Together with the medical world, together with the insurance, we are going to build a very good medical landscape. Through the multiple layer innovative method, it is going to help the general public in China to be relying on the health insurance.

Thank you. Very good introduction. We actually got to know the technological methods of Meditrust. I've been waiting some of the information from the United States. I believe that Mr. Xiaodong can you share with us what is the major driver for Meditrust to join hands with China Re?

We have a high level consultants who is the -- who used to be the VP portfolio CBS. We've been talking with him for many times. And the reason I think quite interesting is that the PBM method in the United States, if we discuss it with the innovative methods, we have been using the logic of PBM. And its application in China has been quite innovative. So actually, the PBM companies in the United States is actually only collaborating with insurance, and has bought anti-insurance. You will find that for the top 3 insurance companies, they have their own largest PBMs. And these 3 ones has been horizontally and vertically integrated. And for the insurance market, it's actually occupying a very huge market share. In China, the scenario is quite different. The health care insurance companies has been selling 400 different insurance products. In China, we have Insurance, among other different insurance And we were selling it -- you will find that insurance companies, the powers that we generated is quite limited. I've been talking about the whole insurance industry. If you are only accounting for 5% to 3%, there is actually no meaning for that. I've been always talking about the case -- our collaborations with the upstream means that we have a lot of -- so we actually pool in the -- we actually built a water pool and the upper stream. And we are going to start the water and waters in the downstream. So the problem used to be that do we have enough water to evocate? But currently, we are trying to building of the infrastructure. So which kind of waters do we share? What kind of pharmaceutical players should we share to ensure that more interest will be generated. We built the pool and -- water pool, and we need to gather all the waters here. That's the reason why we are elaborating with China Re because for hundreds of the insurance companies, the efficiency has been lower down.

Okay. Thank you very much. I believe that you have introduced us the infrastructure collaborations. The next question goes to Mr. [indiscernible]. After hearing your discussions, we want to understand that what kind of product had recalculated? What is actually the future result? What kind of areas are we going to collaborate together?

I believe Mr. Tian and Mr. Xiaodong has mentioned about the critical disease. Our collaboration with is a comprehensive. The first part is that we should be serving the different products. And the second part is that starting from 2011, we have been came up with a special innovative product. And in the recent few days, we have coverage and we have 44 different insurance companies. And it enables the insurance company and its responsibility. And for the insurance and health insurance sectors, we need to get more responsibility. For the different segmented markets, we are in a very strategic position. Second part is the integration for the needed resources. What's behind it is that Meditrust is a premium role for integrations in China and abroad. And we have also extended this to some of the medical devices to the greater health world. China Re is bringing the role for data and for our insight to the market. Our clients and our insurers is actually being guaranteed, and we have channeled the vote from medical insurance to the pharmaceutical world. At the same time, we generated the data, the supply and also the long-term resources integration. The third question is about our collaborations in data. We believe that all of it is being back by our data. We think that by integrating the data, the tumors and oncological treatment, we have builded the special invited products. And the coming products, the coming 1 to 2 years, we are actually thinking about the experience to optimize the product. And at the end of this year, we have been working together with BCG. And also we integrated all kinds of results for the payment sector. We have came up with our continuity channel disease payment. This is actually the first practice in the market. We covered all the special usage scenarios for the drugs. And currently, we covered around 20 different medical clients. And this is actually a systematic way of arranging it. Based on that, we are going to discuss the future development. And thirdly, we also should think about the service in the medical world. And Meditrust is also going to -- going through the prescription, and we should also work as a delivery. The most important part is that we should -- the traditional medical product at forefront. That is to say, the client is going to get their claim risk. It is also going to optimize the treatment efficacy for the business. In 2020, I think all of you have noticed that is such a very of hot product. It was being listed for over 20 different cities in all of it is being actually located and listed. At the same time, medicine is also going to be a very important screen. At different scenarios, we've been talking with players in the medical insurance sector. But in the past, we've been talking with the practitioners. We need the other parties to understand our pain point. And moving forward, we are going to integrate in this sector, and this is also going to improve our practice.

Mr. [indiscernible] you have used our in practitioners. And I believe that 2 companies is also going to give us -- so we are going to proceed into the fourth part of this event. And for China Re Life, you have been blessed with technologies. And I believe to some of this you have given us a very good descriptions. Mr. [indiscernible].

A platform all of these advantages. Are you going to think about technological transfers to get more consultant fees?

In the recent few years, China Re has always been talking about the product plus service. We've been working with the product. We also have been participated in the infrastructure construction. And we have also provided with the market a lot of data service. We have also provided 20 sessions. For one part, it's going to be the infrastructure construction. We're going to serve the clients. We better and deepened our understanding to the risk. These are something that we have done for the traditional channels, and we are charging somewhat fees for this sector. But we should understand this is a area where the -- we have been continuing to discuss about that the integrations for the different industries, and we should think about the new

Thank you very much for your sharing. You've been describing a quite important feature. And the final data I want to share with you is something that we have been researching into. In 2000, the total premium in the health insurance market is around 5.6. But this year, the total number has been surpassing 700 billion. That is 200x compared with 200 -- compared with 20 years ago. So I'm really bold to say that we are only the first few days of the development of the China health insurance. Now we are going to open up the floor for questions.

Thank you very much, Mr. [indiscernible] and we also want to thank all the distinguished. Now the floor is open for questions. So all the investors and analysts, please identify yourself before the questions. And we have some of the on-site investors. And we also opened up the online question-and-answer session. We are going to connect ourselves to the first person is being asked by Mr. Jenny Jiang from Morgan Stanley.

Thank you very much for your sharing. For the integrations of the health insurance, China Re has been very impressive. My question is also about the innovative factors, currently, for the pharmaceutical sector? It is also a very small sector compared with the total fees we paid in the health insurance. My question is to Mr. Zhang and Mr. Tian, how will we reopen up the horizon wider? If we want to enter into the medical claim sector, has we better managed the business scenario to avoid the potential practitioner risks? Currently, the total -- the insurance model is being based on the lower frequency claim payment. The model is very different from the U.S. practitioners. So how will make the market larger to benefit more people? And how will we lower down the risk? Can you hear me? That is my question.

Thank you very much. Madam Jiang, for you, wonderful question. And you have been mentioned about the market for the special medicine. I've been mentioned about the 2 directions. The first one is that we should dive deeper into this market. For example, we should keep up with a better product. The current special medicines and market is focusing on the secondary tumor and oncological disease. But moving forward, we are also going to include some of the high-quality drugs and high-quality medicines and medical devices. Second, we are going to open up the For example, we are going to include more different products. For example, we are going to have the short-term drugs, short-term medicines, long-term medicines and some of the medicines, which is going to cover the patient for the lifetime. And we have also expanded the products to the health insurance. There is for the different insurance products. We are also going to keep up some of the products like long-term oncological disease insurance. And these are the thinkings behind the product design. The second part is we should think from the clients' perspective. And we've been talking about the we should think about the 2 client sign. Currently, we have been came up with the Because currently, the product only covers about the health -- healthy people, but we should also include -- we might also include the patient or people with the underlying conditions in the future. These are some of things that we have been thinking. You've been mentioned about the high frequency of claims payment business model, we'll be thinking about that. For example, for the outpatient department in the market. Actually, nobody wants -- is doing the outpatient department right now apart from the high-end medical insurance. Moving forward, by integrating the difference part of the industry, we are going to review the prescriptions. We are also going to include some of the high-quality medicines, for example. In the clinical disease, some of the drugs, including the diabetes, might be very cheap, but we also have a better, more effective, but -- of expensive drugs. In the future, we are going to replace the one medicine with another. And our general thinking is that we are also going into the different segment market, including the dental clinics because dental clinics is a very good way to -- for us to get into the patient. If a patient have some dental disease, that does mean the patient is not healthy. It is a very good channel. It is a very good gateway for us to get in touch with more patients. There are many ways. There are many thinking behind us. But currently, all of these logic -- all of these thinking is underway. We should innovative ourselves, and we should think about the Chinese general environment.

I'd like to add up on top of that. From the medical perspective, you've been mentioned about the special medicine -- specialty care. In the U.S. market, it is accounting for 50% of the U.S. market. It's not a very small market. But currently, in China, it's only accounting for 10% of the market. If you look at the Chinese investment in the health care market, we have been investing in billions of RMB in the research and development of the special care. The specialty care is not only about the oncological disease. We believe it's a very huge market. We should also think about the development of the Chinese insurance industry. Why, in China, the critical disease insurance can grow quite rapidly? It is because the general public really have the about the critical disease. But the general public don't have a very urgent demand for the chronic disease. That's the reason why we should goes and starts from the special medicine. Mr. Tian has talked about a lot about the future development. But from the medical world, our view of risk means that moving forward, we are going to win a small frequently paid products. If in the future, if the is not being paid by cash, the risk management ratio would be very low, but our collaboration with the China Re means that we should be focusing on the medicines, medical devices all of it is what we call the medical standard product. As long as it's been covered, as long as we are paying for this medical standard product, the industry should be integrated, it's not about the current in the future. In each PBM, we should introduce small payment fees and our risk management is going to be quite different. It's not going to be about how many people is going to get the claims. And the China Re Life is going to develop -- is actually developing a product to combine the chronical patient. I believe, the chronical patients, they are using the drugs and the medicines in a quite frequent manner. And in the traditional insurance of products, we don't offer any traditional insurance products for these chronical patients. But if we look into this segmented market, we believe that these chronic patients and their insurance can be manageable. These are my opinions. Thank you.

We'd like to invite Mr. [ Li ] Executive Director of [indiscernible]. She asked a question.

Thank you very much for the information that you have been provided. I have a few questions. I've been talking about -- the medical insurance has been covered about 50% of the total medical claim. While the commercial interest -- commercial insurance only cares about 3%, and the rest is being covered by the general public around for RMB 2 trillion. And product innovation is quite important. Client education is also something in urgent demand. But something we have not mentioned in the previous talk is that for 3% of commercial insurance is gradually representing -- gradually replacing the 45% of the general public payment for the different 3 parts, further channels and general clients, which is the urgent driver for the insurance company to address to use 1 important element to address the other 2 problems.

You've been talking about the sales channels, right, representative and also the insurance and also the insurers. I think for these 3 channels, our priority should be focusing on the online channels because in the future, if we want to buy some of the consumables -- the general public in China, they don't want to buy some of the consumables. That is to say if they want to pay for the insurance product and they don't get a claim, they will think that they just spoil the money on. We can only use the online channel to expand the client basis. If we think from a 1 product perspective, I believe the Internet should provide us a very good platform. From another side of the -- if we look into the other side of the story, the critical disease insurance means that we should have our own sales and marketing matters. For example, if I'm going to sell a product in outpatient department is definitely going to help us to accelerate the sales in the critical disease and help us to sell the annuity products. I believe that through the representatives channel through the dealership, they are going to get more clients and we are also going to maintain the sales channels. For the insurance sector -- for the banking insurance sectors, we do have some of the problems because, currently, I think all of you have know that the critical disease insurance is not being sold -- it's not being sold or not being sold in this channel. To some extent, we are still using the dealership network. I think our priority is going to be the inclusive finance through the online platform. And moving forward, if the general public, or if the consumer has a better awareness of the insurance market, we are definitely going to use the dealership channels. Let me add up on that this year, there's also another quite important sales channels. If you look at the sales channels in the United States, 30% to 40% of the health insurance. Means, it's actually being get through the governmental projects. Of course, this is closely integrated with the insurance company. They are actuating to put a design. The online plus off-line integration across the country is actually providing a new sales channel because the Medical Insurance Bureau is tacking the whole network up. That is to say for 30% to 40% of the population got that network. I believe that it is going to serve the basic demand for the general public. And through the governmental method, it is also going to promote the sales.

Thank you. Now we'd like to invite Mr. -- analyst, analyst, Chief Analyst from Securities, nonbanking financial sector.

For the insurance company, how -- insurance is actually one of their priorities. So my question is that for China Re Group, if you want to -- interested to health insurance sector, what is your business model? So currently, the claim of the health -- the claim payment ratio of the health care insurance is only -- in China is only around 3.6%. So which -- what entity do you think have the most opportunity to get the largest share of the market?

So let me answer your question. The business model for the health insurance, currently, we believe that the time gap should be one of the major payment -- major insurance -- is going to be major sources for the perfect. The biggest feature for that is that the insurance company don't expected -- have not expected, but they don't want to -- they don't care about the perfect. And the health insurance, they hope to came up -- they hope to be benefited by the new product. For the enhanced company, they cares about the clients. So that is to say, we are not going to have an overlapping of the business between this and also the insurers. I believe if they can sell the critical disease insurance in a continuous manner, it is also going to benefit us. Second question you have been mentioned about. I'm not sure about your question. Can you repeat your question.

Currently, the health insurance only have a claim ratio of 3.6%. I've been believe that we have many different stakeholders in the general picture, what kind of role will China Re play?

To be -- to answer your question, we have not done too much in this sector. We only have -- we have only bought some of the medical management service. Currently, the health care management institutions in China is struggling. Not too much of them is profitable. But actually, domestically, we have seen a bunch of the new products emerging one after other. For example, they are being benefited by the medical resources. And for these institutions, these kind of institutions do exist. But if we can be integrated with such institutions with our insurance traffic, we are going to integrate the medical institutions, the doctors and our 30 hospitals, and we are also going to satisfy their profitable demand. For example, currently, the hospitals, the doctors, it's really difficult for them to make some money. In the past, the medicine is actually supporting -- the profit of the medicines that were supporting the doctor's income. But moving forward, what will happen to the doctors, what will happen to the medical partitioners, if we can some of the profits? It is going to be a very good profitable model. We do see the institutions like this existed. For example, Beijing, we have 1 to 2 institutions. We are also going to move into this direction. To sum it up, we are integrating with these medical institutions and playing our rules and sharing our benefits and our strategies in the data, in the client space.

Thank you very much, Mr. Tian, for your answers. Now the floor is open up to the online session. I believe all the investors and analysts can ask 1 question. Please identify your institution before the question. Thank you. The first question, please.

The first question is Mr. from. I have 1 question. What kind of strategies will you make in the future to support the healthy development of the health insurance?

Health insurance has always been one of the priorities. And I also believe it is also going to be an area that we are going to focus. Currently, we have been redirecting our focus from the critical disease insurance to the clinical disease and also to the special medical insurance. I believe China Re has our own advantages and we have made a lot of innovations and explorations. We hope health and medical sector is going to be the line foundation. It is also going to pay the stones for our future development. It is also going to be our strategies from the group's perspective. We are going to guarantee them from the human resources and among other different sectors.

Thank you very much, Mr. [indiscernible] for you current answer. We -- for the interest of time, China Re Group is going to finish up our 2020 Investor Market Open Date. Thank you very much for your support and consent. At the end of this year, I wish you a healthy and happy new year. If you have other questions or more information that you need to understand, please contact us. Thank you.