As intermediaries, e-insurers zero in on niche segments

The Insurance Association of China issued licenses to three companies recently, including one branch of Meituan Dianping, a dining information website.

The move shows the growing interest of internet-based companies to enter the insurance sector, experts said.

Yao Hu, general manager of the insurance business of Meituan Dianping, said the company aims to better serve its 5 million online shop owners involved in food delivery, hotels, cinemas, car hailing and tourism.

Insurance, which had high entry barriers earlier, is now welcoming more internet-based players, including Alibaba Group, Tencent and Baidu Inc, which have been authorized by the industry supervisor to act as intermediary agents and sell insurance products on their platforms.

WeSure, the online insurance platform of Tencent, launched its first health insurance product in November 2017 in cooperation with Chinese insurer Taikang Insurance Group.

Alibaba's financial arm, Ant Financial, has partnered with more than 80 insurers across accident, travel, property, life, auto and housing insurance segments, according to a report in Beijing Youth Daily.

The insurance sales of intermediaries have surpassed 10 billion yuan ($1.58 billion) in 2017 with 100 percent growth rate in three consecutive years, data from the Qianzhan Industry Research Institute showed.

"For internet companies, it's a business that is bound to make profit because it doesn't cost much to boost sales," said Hao Yansu, director of the school of insurance at the Central University of Finance.

However, though these companies were often reported to have overturned traditional industries such as catering and retail, their participation in the insurance industry may not have such a significant influence due to their limited role as intermediary agents, industry insiders said.

Hao said it is because most of the major insurers already have their own online platforms, whose premium can be cheaper by cutting the commission cost at intermediary platforms.

Although more netizens are likely to see the advertisements of insurance products on a third-party internet platform, it does not mean they will actually buy them because their goal in visiting those websites is not to buy insurance, Hao said.

"Middle-level and highend customers will still choose professional websites for consultancy and purchasing," he said.

He further said that for insurers, searching for cooperation with internet-based platforms is more about getting technology support or data exchange.

"Data collected by internet companies from their massive online traffic can be further analyzed and thus give a feedback to insurers to promote product upgrades."

Agreed Li Zichuan, an analyst from Beijing-based internet consultancy Analysys. "Their cooperation can be very diverse, ranging from marketing, advertising, data mining to clients' services."

The risk of releasing new products can be reduced by authorizing internet-based companies to invest further in sales promotions and to expand influence among the public, he said.

According to a report released by the Insurance Association of China in late February, premium income of the domestic internet-based property insurance firms reached 49.3 billion yuan last year, to which nonauto-related business contributed 37.75 percent, up 17.18 percentage points year-on-year.

Such growth may be driven by people's growing habits of online consumption and companies' innovation in products, such as online shopping-targeted freight insurance and travel accident insurance, it said.

However, Hao said traditional insurance products will still dominate the online and offline insurance markets in the future because there is much space to explore.

The number of Chinese who bought endowment insurance with five-year term or around that tenure reached 40 million last year－not big in the context of China's 1.4 billion population, said Hao.

"In countries with high public welfare, the percentage of people who buy commercial insurance is also high," he said. "People (in most developed countries) buy commercial insurance because there are limitations in their social security system."

For example, it is difficult to book a private room in a hospital, but insurance can help a person do that in advance, he said.

With more Chinese people pursuing a higher quality of life, demand for insurance is growing, at least in major cities of China, including Beijing, Shanghai and Guangzhou, capital of South China's Guangdong province.

Assessing the situation, Hao suggested internet-based companies should try to provide customized products, instead of trying to cover all kinds of insurance.