Guolian Life Securities: There is still a large development space for commercial insurance in our country. Pay attention to opportunities related to the development of innovative drugs and medical devices and supporting services and commercial insurance products.

Guolian Minsheng Securities released a research report stating that commercial insurance, as an important complementary force in the payment end, is expected to provide differentiated medical health protection with great demand potential. By 2023, China's commercial health insurance premium income is expected to reach 903.5 billion yuan, accounting for about 27% of the same year's basic medical insurance income, of which approximately 48% is critical illness insurance, indicating the potential for rapid development of medical insurance. The firm believes that with the development of commercial health insurance in China, innovative drugs and medical devices, as well as high-end medical services, are expected to be more covered by commercial insurance, benefiting the related industry chain. It is recommended to focus on innovative drugs and services with payment-end logic, as well as opportunities related to the development of commercial insurance products. Guolian Minsheng Securities' main points are as follows: Under the background of an aging population, medical insurance is under pressure, and commercial insurance is expected to become an important supplement. The positioning of China's basic medical insurance system is "basic coverage." Due to limited funding levels, comprehensive coverage is difficult to achieve, requiring the development of a multi-level medical protection system to meet the growing medical health protection needs of the people. By 2023, China's total health expenditure reached 9.0576 trillion yuan, with basic medical insurance accounting for about 31% of the expenditure. Commercial insurance, as an important complementary force in the payment end, is expected to provide differentiated medical health protection with great demand potential. There is still considerable room for the development of commercial health insurance products in China. Limited by issues such as information asymmetry, high institutional marketing underwriting costs, low claims ratio (around 42% in 2022), and difficulty in combating insurance fraud, the development of commercial health insurance in China has been limited in the past. According to the "White Paper on Innovative Drug Payment in Chinese Commercial Health Insurance," China's commercial health insurance premium income is expected to reach 903.5 billion yuan by 2023, accounting for about 27% of the same year's basic medical insurance income, with about 48% being critical illness insurance. Medical insurance is expected to develop rapidly. Policy empowerment brings opportunities for the development of commercial insurance. Recently, the medical insurance bureau has frequently mentioned commercial insurance in various documents, highlighting the importance of developing commercial insurance. The National Medical Insurance Bureau is planning to explore and promote the empowerment of commercial insurance companies with medical insurance data, synchronous settlement of medical insurance funds and commercial insurance, as well as other supportive policies, which are expected to significantly reduce the underwriting costs of commercial insurance companies, promote the improvement of claims settlement levels, and bring new opportunities for the development of commercial insurance. Learning from overseas, developed countries' commercial insurance mainly targets high-end needs. By analyzing the development of commercial insurance in many countries overseas, the firm found that overseas commercial insurance mainly targets high-income groups, reimburses for high-priced innovative drugs and medical devices, and in some cases covers non-essential medical consumption upgrade services such as dental, wigs, and beauty. As overseas developed countries have strong coverage under basic medical insurance, some countries implement universal medical insurance, and commercial insurance needs to seek unmet demands. The firm believes that with the development of commercial health insurance in China, innovative drugs and high-end medical services are expected to be more covered by commercial insurance, benefiting the related industry chain. Risk Warning: Increasingly strict policy regulation; deteriorating competitive landscape; industry demand falling short of expectations.