China's Insurers Try Novel Approach to Senior Care: Building Retirement Communities

Some Chinese insurers are building high-end retirement communities to deal with the rapid aging of China's population, reports the Wall Street Journal . So far, the insurers have spent more than $10 billion building these communities, according to the China Insurance Regulatory Commission. The developments are mainly targeted at affluent individuals, who must purchase a term-life insurance policy with a minimum single premium of $300,000, payable upfront or in yearly installments over a decade. Furthermore, community residents pay monthly service fees of about $2,000. China's National Bureau of Statistics says in 2014 the country's insurance regulator started actively encouraging insurers to pursue such developments, a year before the nation's working-age population experienced a record decline of 4.87 million people to 911 million workers. The China Insurance Regulatory Commission notes the developments are a way "to increase the supply of resources to take care of the old, and ensure the joint development of insurance and aged-care industries." Some analysts calculate that occupancy rates start at about 30 percent in the first year but can increase quickly in major cities to 90 percent or more. Meanwhile, several insurers also have spent money on U.S. senior housing assets to obtain management expertise and earn investment returns.