The Increasing Investment of Senior Housing for Chinese Life Insurance Companies: Reasons and Motivations

Abstract

In China, there has been a notable growth in the practice of life insurance companies investing in senior housing projects, which has gained significant popularity. 8 out of 10 largest life insurance businesses are actively engaged in the life insurance market. The senior housing firm with the highest market share is owned by a life insurance company, which has successfully sold 190,000 products through its investments in senior housing. This article seeks to present the business model and elucidate the underlying rationales. A thorough review of the current body of literature is conducted, followed by the use of the case study methodology. This study concluded that life insurance products, such as the happiness guide, play a crucial role in the economic model of life insurance and senior housing. The reasons were categorized into internal and external factors. The expansion of liabilities is an internal factor that is influenced by the leverage effect of a senior housing projects. Moreover, the features of insurance capital exhibit compatibility with the investment of senior housing. Additionally, external factors such as a poor income replacement rate and insufficient availability of high-quality senior housing might also contribute to the condition.