Tuan Ming and Elayne Grace discuss the rapid growth of online insurance in Asia and the Chinese appetite for product innovation and business opportunities in this area.

This is the second instalment in our ‘Inside Asia’ podcast series which aims to explore the experiences of actuaries working in Asia or moving between the Australian and Asian markets.

On 27 August 2018, Elayne Grace, CEO of the Actuaries Institute, and Tuan Ming, Head of ASEAN, China, HK and India Regions at Gen Re (for Life & Health), met in Sydney to discuss what some of the innovative Chinese insurance market players are up to.

The Chinese appetite for new forms of online insurance – both among internet giants like Alibaba, and traditional insurance players ­– is generating many examples of innovation in the insurance industry.

China is the world’s second largest insurance market and growing fast. As someone who’s been working in Asia for over 20 years, Tuan has witnessed how the Chinese market has changed.
“It is just unimaginable, from a small market, [it’s] grown to become the second largest market in the world. I feel that it is a privilege to be part of the industry [that] contributed to the growth. And we are seeing that the industry is delivering the real insurance and protection insurance to the Chinese consumers,” said Tuan.

Alibaba earned 168 billion yuan (or US 25 billion) in 24 hours of the ‘Double 11 shopping Festival’ in 2017. On the same day, over 600 million policies of Shipping return insurance were sold. This is a world record for number of transactions of a single product line in a single day.

The first online-only insurance company launched in China in 2013 - Zhong An. Several others have opened since. Tuan described how such companies are leading the way in terms of product innovation and creating new business opportunities.

“They are property and casualty insurance companies and can only sell and distribute their products online. That gave them the extra motivation to do well. They sell a lot of shipping insurance policies for the Chinese consumers who buy their products online. Some of the other products that are becoming popular are, mobile phone screen insurance protection and flight delay insurance is becoming very popular,” said Tuan

“This first retrocession for Life & Health industry appeared in 2016 when Zhong An had a successful medical insurance product which we co-develop with them.”

Shipping return insurance has been a major premium generator for Zhong An. In 2014 it contributed 77% of total premium, but two years later that decreased to 35%, due to market competition and the development of other product lines.

The online insurance market – with its lack of regulation and structure also poses threats to consumer needs and to insurers.

Ping An Group – a traditional insurance and financial powerhouse in Asia - has invested billions in FinTech and HealthTech. Last year, it announced the launch of:
Ping An Life - an AI Customer Service to solve the problems of slow identification and slow claim process; and
Ping An Health – an “AI Doctor” that accumulates millions of online diagnoses data for use in online medical pre-diagnosis, triage and consultation.Ping An’s transformation to a technology-driven enterprise reflects that the core of insurance is not just the products, but more about the services to people.
“Ping On is increasing the interaction with its customer. For example, the customer can use the app to access some basic medical information or even be buying some basic medical equipment online. It has also developed to a stage where some of the basic medical advice can be provided online as well. By that, Ping On is trying to position itself not only as an insurance company, but also as a health management partner of their consumers.”

“Ping An also triggered other insurance company to innovate as well. The insurance industry [does not only] react to a disaster, an accident or sickness happening to a customer. It [wants to] become an industry [that asks] ‘how can we help our customers to live healthily?’. Some of the new products in China will incorporate some incentive for the policyholders to live healthy and get rewarded by doing so,” said Tuan.

Alibaba is taking advantage of its deep understanding of its large online consumer database. Last year it offered one year’s free coverage of critical illness insurance - with no medical examination or waiting period.

13 million Alipay users reportedly activated the insurance within 20 days of its launch – simply with two clicks on a mobile app. An online community forum with experts has since been set up to help educate internet users (especially those new to insurance).

“Alibaba was the first one to make the move. When the customers click and accept the insurance coverage, Alibaba have access to information on which statement of the customers are more interested in buying insurance cover. This gives them the ability to upsell the product,” explained Tuan.

There is clearly appetite among Chinese consumers to embrace new online forms of insurance. Tencent joined the industry slightly later to take advantage of this market.

WeChat has been used extensively by all the insurance companies to sell products online, however, Tencent, after setting up its own online broker in November 2017, has become very active in distributing medical insurance products and personal accident products to their huge base of WeChat customers.

WeChat was developed by Tencent. It was first released in 2011, and by 2018 WeChat was one of the world's largest standalone mobile apps, with over 1 billion monthly active users (902 million daily active users).

In China, you can’t live without WeChat, which is an equivalent of a WhatsApp, Facebook and Twitter.

“It also has other services, one of the most important one is a WeChat Pay, that allows commerce to flourish on the WeChat platform. For customers to buy insurance products, payment is no longer an issue - they can pay and receive claim payment easily on WeChat Pay,” said Tuan.
The huge population in the China market allows the insurance industry to focus on different target segments and reach a group of consumers who are more interested in readily buying insurance cover.

Instead of asking the consumer for their health information, insurers have a basic understanding of the consumer and are able to design and market the most suitable product to them. Some of these data insights have been applied to underwriting as well, but to a lesser extent. Data privacy is still a major issue in China. But that’s a topic for another podcast.

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