HKU Bulletin February 2013 (Vol. 14 No. 2)

Books If any product represents modernity, it is life insurance, which takes something seemingly immeasurable – the unpredictable loss of human life and limb – and puts a dollar value on it. As Associate Professor of Sociology Dr Cheris Chan points out, “It’s an extreme form of rationalisation.” It was always going to be a hard sell, but in the West the insurance companies got around resistance from those who regarded human life as priceless by imbuing their products with deeper meaning. Life insurance became a way to look after loved ones if you prematurely passed away. In China, however, there has been stubborn resistance to such risk management. The root cause has been the Chinese taboo of thinking and talking about death, says Dr Chan who has written a book on the Chinese life insurance industry based on extensive interviews and historical research. “In Chinese societies there is an incompatibility between life insurance and Chinese cultural values,” she says. Death, especially premature death, is a taboo topic in China, something Dr Chan credits to a combination of the lack of a concept of life after death in Confucianism and the miserable and horrific afterlife depicted in folk Taoism and folk Buddhism. Even if one doesn’t believe in these depictions, it can be socially offensive to discuss death. Not buying the risk concept As a consequence of their avoidance of the topic of death, the Chinese do not believe that misfortunes will befall them. Nor do they embrace the idea of insuring against an uncertain future because they already have a long-established habit of saving. All of these factors made them decidedly unenthusiastic when foreign companies began selling risk- based life insurance there in 1992. “With life insurance you are not just selling a product, you are selling a concept,” Dr Chan says. “When foreign insurance companies first arrived they tried to raise people’s sense of awareness that accidents could happen to anyone at any time. They told stories of misfortunes of families that experienced accidents. This was similar to the strategy they used in the US, but it didn’t work in China. People didn’t like to hear of these misfortunes.” It took a local company that understood what Chinese people did and did not want, to give the industry the boost it needed to survive in the Mainland market. Insurance as a savings product Ping An began selling insurance in 1994 but instead of focusing on risk management products, it promoted savings products for retirement and children benefits. It also recruited a large number of part-time sales agents, such as housewives, who used their interpersonal networks and ‘guanxi’ to increase sales. The products themselves offered attractive financial returns, at least for awhile. Ping An would spend the next 10 years on a rollercoaster of offering seemingly moneymaking products, including one linked to the stock exchange, that would subsequently run into trouble as the macro environment changed. However, the company survived. In 2002 it started to pull back from money management products to follow the Western risk management model more closely. But here it came up against the same taboos that foreign insurers had encountered. The products were not very popular. “We can see that when companies shift to selling money management then the market grows. When they shift to risk management the market shrinks,” Dr Chan says. The taboo persists Today both foreign and domestic companies offer money management products – a current favourite is ‘dividend insurance’ – while risk management is a slow grower. Dr Chan has found a similar pattern in Hong Kong and Taiwan, whose societies have been more stable and affluent over the longer term, suggesting the taboo on discussing or thinking about death runs deep in Chinese society. It even persists after intense training by insurance companies on the merits of risk insurance. Dr Chan accompanied one Chinese insurance agent on a visit to a client. The client and his wife were in their 40s and had a teenage son, but the husband did not want to buy life insurance. His reason was that he wanted his son to be financially independent and didn’t want to leave him a lump sum. Afterwards, Dr Chan asked the agent why she didn’t suggest that the man name his wife as the beneficiary. “The agent said that the man and his wife were the same age. What she meant was that they would pass away at about the same time. So the agent didn’t think this man would have an accident tomorrow.” Yet the possibility of such accidents is the fundamental basis of life insurance. “The companies try to provide training, but you won’t be able to change someone’s cultural concepts,” Dr Chan adds. M Marketing Death: Life Insurance in China Insurance can indeed be interesting, as sociologist Dr Cheris Chan found out when studying how this very Western creation has been adapted to Chinese cultural values. They told stories of misfortunes of families that experienced accidents. This… didn’t work in China. People didn’t like to hear of these misfortunes. ü ý þ ÿ ý þ ÿ 39 Feburary 2013 The University of Hong Kong Bulletin