Insuretech boosts China’s online insurance market

Already a major new player, the potential for growth in China’s online insurance market is vast – with lessons for UK insurers to learn

China is trailblazing when it comes to insurance. This underdeveloped market has been posting nearly 20 per cent growth. Its billion-plus population are leapfrogging paper policies and embracing digital commerce with eye-popping vigour.

The world’s second-largest economy already has one of the highest adoption rates for fintech products. This is now cascading into insuretech.

Take ZhongAn, the company launched four years ago with offbeat, online, micro-policies including one insuring against self-inflicted liver damage for Chinese football fans. Another policy reimbursed people when temperatures hit 37C. One even paid out for flight delays while customers were reportedly still at the airport.

So far the Shanghai firm has sold nearly six billion policies to 460 million people. Valued at $10 billion, the company’s tech platform can process 13,000 policies a second. Yet it still has less than 1 per cent of the market. Its rival PingAn is the world’s largest insurer by market capitalisation; its shares have more than doubled in a year. Ignore this Asian market at your peril.

“Insuretech, messaging platforms and online are disrupting the landscape at incredible speed,” says David Wu, insurance sector leader for Deloitte China.

The speed and scale of investment has made China one of the fastest growing insuretech leaders in the world

“China’s three giant tech companies have aggressively expanded the reach, scale and accessibility of their digital platforms into the financial services space. The speed and scale of investment has also made China one of the fastest growing insuretech leaders in the world.”

Alibaba, Tencent and Baidu are the heavyweights pumping money and joint ventures into this sector, creating an ecommerce eco-system that has no parallel globally, in terms of user numbers or money spent via mobiles; it’s now 50 times larger than the United States. Before going online, China had a relatively small and immature system of agents and brokers compared to other countries.

Cliff Sheng, partner at Oliver Wyman, says:  “Since each province in China has different regulations, each insurance provider faced more complexity; therefore, digital products are taking over a space that was untapped. Digital distribution is now becoming increasingly important to standard personal products such as car and simple health insurance.”

China’s insurance market has doubled over the past six years. Yet compared with developed markets, penetration is lagging, with a rate less than 4 per cent. Contrast this with America where it’s 7.3 per cent and 10 per cent in the UK. No wonder the value of insuretech premiums is predicted to reach more than $174 billion by 2020, according to research by Mr Sheng and his company.

“Consumer data is widely and cheaply available. Underwriting and claims can also be fully automated. Chinese insurance companies are successfully leveraging referrals on social media and paid clicks on digital platforms to penetrate more income segments in society and second-tier cities,” explains John Ott, partner at Bain & Company in Shanghai.

This is not to say that traditional channels are evaporating. In some categories, such as life insurance, which is a complex sell, they still dominate, especially in China’s relationship-based culture where people tend to do business with people they know. It is also a big country with many remote areas. Many consumers are still asking basic questions about the need for insurance at all.

What’s changing fast though is the ease and ability of consumers, especially the growing middle classes, to access simple and small policies, mainly via smartphones and platforms such as WeChat. It also helps that these services are supported by brand names people trust. This is beneficial in convincing users to subscribe. China’s Insurance Regulatory Commission has also been more focused on traditional products and has yet to scrutinise specialised micro-policies from insuretech companies.

“Companies such as Alibaba and Tencent are extensively using big data to track users and behaviour across all touch points. Most of the insurance subscriptions are happening during life events such as births, big purchases or travelling. It’s quite easy for players at all points along the consumer journey to track and trigger purchasing,” says Thomas Guillemaud, chief operating officer of China-based IT Consultis.

For example, take a consumer on Tmall, Alibaba’s online consumer marketplace, it spots changing purchasing patterns such as buying a cot, a pushchair or imported infant formula. It knows this person is expecting a child and therefore Tmall proposes insurance for the new born and for goods purchased.

“The consumer can be tracked on all channels, which can bring about personalised products. Ultimately, insuretech companies are in a very good position, since they’re moving towards full control of the digital market,” says Mr Guillemaud.

With internet purchases and split-testing, insuretech companies can also optimise products, where 50 per cent will be offered one policy, the other half another. The one that converts better will then be offered to all customers in the future. This enables insurtech companies to deliver new products faster.

“This is certainly fostering product innovation that’s aligned to real customer needs, as well as shortening the product development cycle,” explains Joanna Wong, partner for consulting at Deloitte China.

In terms of policies, shipping return insurance for goods purchased online, flight delay policies, intelligent health insurance and household property theft are all categories that have thrived in the digital space, although you can get many exotic products, even drone insurance.

What’s unique about China is the ability of insurers and insuretech companies to rally around consumer data and create an eco-system to master the marketplace, and transform their business models, as well as use open application programming interfaces to offer new and interesting products.

It’s not without issues though. There is still a lack of insurance education, for instance. The Asian insuretech community also remains relatively small with activity mostly centred on China, Hong Kong and Singapore. “Price sensitivity and high churn rates remain challenges across the Chinese insurance market. Consumers and the government are now increasingly aware of data privacy concerns,” says Bain & Company’s Mr Ott.

The rise of digitally driven micro-policies is spreading in Asia. In traditional Japan, DoCoMo has started to integrate services with insurers to pop-up advertisements based on your location; for example, if you’re at an airport, your mobile will offer travel insurance. South Korea is moving towards digital with its WeChat equivalent Kakao.

There are also lessons to be learnt in the UK from the rise of China’s insuretech market. After all, people in the UK have some of the highest online shopping rates in the world.

“Many consumers are already overinsured. The UK could benefit from switching from insurance of goods to insurance of lifestyle by offering smaller products that are more specialised rather than super contracts insuring everything,” says Mr Guillemaud.

Do you want to know more about Asian Insurance market? Enjoy our Digital Insurance Innovation Day #MOI2021 at 09th & 10th Jun. 2021! HERE



I don`t like „corona-virus“- I don`t like this crazy time and I don`t know, how can we solve this problem together, the health and the economic situation?

I think, insurance innovators from around the world know, I have a Baby, called #MOI – THE MAGIC OF INNOVATION – Insurance Innovation Day in Vienna. This Baby is already a Child, it`s going to school. This year, it`s 6 years old, but from last September until March, we wanted to prepare our „Baby“ to be a Schoolchild. To develop more creativity for our game, to dance a „Robotic show“, to meet with other MOI friends and to learn more and more about the future of insurance.

But in March 2020 started a „crazy time“ for the whole world, that we never had before. We didn`t know the word „social distancing“, we didn`t know the feeling, not to meet with parents and friends, because of this high risk for us. We didn`t know, the feeling without freedom, to do everything, that we want to do or to go or fly everywhere, we want. This is something “NEW” for everybody of us!

What could I do with my MOI schoolchild? What should I say to my team (more than 10 people from marketing, event team, creative team, IT and of course I), working more than 5 month for the #MOI2020 event, every single day, we worked on a creative concept, we booked a new location, we had a lot of meetings with speakers and partners.

But what would you do? Should we chancel the event or postpone it for the next year or should we take an other chance in the digital world? After some sleepless nights, at beginning of March, I asked every speaker, would you want to be a part of our „virtual speaker“ team and to secure a high level knowledge transfer in a very special digital event form? Except 2 speaker, who sayed, they can`t do it, but all others, more than 30 speakers from around the world say, YES, we will do it, let`s do it! – thank you for your trust, dear MOI friends! You will be the main actor of our „MOI LIKE A MOVIE!“

After a very bad time, I was so happy, to create a creative concept for our Digital MOI! I`m so happy to work together with the greatest people from USA, Latin America, Africa, Australia, Asia and Europe. All our great speaker are preparing the pitching videos already, to start the movie at 18th & 19th Aug. 2020. Do you want to know our #MOI 5 feelings?

Do you know, what is the next step now? I would like to invite you and your motivated, future oriented insurance manager, broker, insurtechs, partners, investors, who want to learn more about the future of sales & marketing, climate change & disaster, ecosystem & platform economy, robotic & AI or the latest InsurTech News from around the world. Would you like to be a part of our „MOI LIKE A MOVIE“ journey and do you want to meet virtual other #MOI friends? Do you know, why the people like our MOI feeling?

Astrid Valek /HDI Insurance „Over the last years MOI has become an international conference and hotspot for the insurance industry. Famous speakers point out new trends and various start-ups pitch their latest ideas and solutions. It is really fascinating and gives you amazing insights and impulses for your own business. No doubt – MOI has a strong impact on the further digitalization and innovation process in insurance companies.”

Christian Winkler / Nürnberger Insurance “Innovation is not only knowledge transfer, but also innovation is inspiration from colleaguas, experts and insurtechs from around the world. MOI is a good opportunity to meet other future oriented insurance manager”

Dr. Robin Kiera / „The MOI is the place in Europe where you meet decision makers and listening to key-notes and use cases you cannot meet somewhere else. It’s maybe the European conference with the most familiar atmosphere. There is no networking app necessary. Everybody is open to talk to you.“ 

Florian Graillot /Astorya.VC : “MOI is the best way to engage with the InsurTech scene, and get insights on what’s happening in that attractive market. On top of that, it’s the perfect place to kick off business relationships with both startups and corporates, as you’ll be sure to meet people that matters.”

If you want to reserve your „virtual seat“ with an early bird ticket till end of Jun, welcome at our MOI community. And do you know, what`s the best? We will innovate together again!

Thank you in advance for your trust to create the best insurance event in the „crazy corona time! With my personally motto „the way to create your innovative company!“

Let`s innovate insurance world!

Why do we need more digital leader in the insurance industry?

The insurance industry is working on digital process optimalisation. They are  learning a lot: how can we develop new business models and special new service models, to support the needs of clients and to achieve the „heart of customers“.

For this purpose they use a design thinking approach, analysing trends and using business model canvas. But they shouldn‘t learn only methods, but also how new technologies like artifical intelligence, blockchain, internet of things or predective analitics work. This combination is very important to be „fit for the future“, to be a digital leader! Because the digital leaders will be the winner and as you know „the winner takes it all“! 😊 I think, most of our challenges are coming from the complexity of digital transformation and the complexity of the insurance branche. How should we start? Should we start with processes, products, organisation, clients or employees? Should we cooperate with a startup or should we be a startup, as digital insurer or should we found a venture and invest in startups? Mehr lesen