Insurers reinvent themselves, move beyond selling policies
Print Edition
DIVERSIFICATION in China’s insurance sector is proving to be good business strategy, as companies expand beyond policy-writing into digital marketing, wealth management, funeral services and operation of hospital and elderly care facilities.
Premium income of insurance companies in China last year jumped 20 percent from a year earlier to 2.4 trillion yuan (US$369 million), the fastest growth in seven years. In the life insurance segment alone, earnings from premiums surged 25 percent to 1.6 trillion yuan, according to China Insurance Regulatory Commission data.
The results are a reversal of fortunes for an industry that has been struggling for years to find a solid footing in a nation where the concept of insurance had no recent history.
Ping An Insurance Group, Asia’s second-largest insurer by market value, has initiated an array of Internet services covering payment processing, peer-to-peer lending, home sales and healthcare consultation.
Already a financial giant in life insurance, property and casualty insurance, banking, securities, asset management and trust operations, Ping An is increasingly turning to its Internet services to support its core businesses.
The group runs more than 10 online platforms, each with mobile phone apps, in an attempt to turn consumers into Ping An insurance and banking clients.
The platforms now have 242 million users, Ping An said.
The company last week reported a 38 percent rise in net profit last year, noting for the first time a migration of 19.8 million users from Internet services to its financial businesses.
Peter Ma, group chairman and CEO, outlined Ping An’s ambition to provide online financial services covering a multitude of consumption areas and highlighted asset management and healthcare as two major sectors.
Ping An’s peer-to-peer lending platform Lujiazui International Financial Asset Exchange Co, also known as Lufax, contributed 5.75 million users to Ping An’s core financial companies, with transaction volume reaching 1.53 trillion yuan.
Another platform called Health Cloud service, with 30 million users, directly linked patients with more than 40,000 doctors and sells medicine alongside healthcare insurance.
Lufax is seeking an initial public offering later this year, and investors expect Health Cloud to follow suit in the next three years.
For Taikang Life Insurance, the grand strategy is to cover people “from cradle to grave.”
In recent years, the company has been actively building elderly care facilities and acquiring or building hospitals. It recently set up a funeral services unit to complete the continuum.
Its online platform Ai You Hui offers a range of funeral services, including cemetery selection, memorial ceremonies, burials and virtual tomb visits via Internet technology.
Consumers can access the service by visiting the Ai You Hui website or by purchasing an insurance policy from Taikang Life.
Cradle to grave
The policies, being marketed to senior citizens at between 18,000 yuan and 38,000 yuan, ensure policyholders funeral services from Ai You Hui. For those willing to forfeit funerals, policyholders may choose to receive cash compensation from the insurer at annual returns of 3 percent.
Zhou Pan, Ai You Hui’s manager for East China, said the online funeral services benefit a younger generation that is almost ignorant about funeral services until a family member dies, while the insurance policy is especially attractive to seniors without children.
The funeral services market is expected to reach 600 billion yuan in 2020, leaving a lot of room for new entrants, Zhou said.
Under the “cradle to grave” strategy, Taikang Life also plans to run its own cemeteries in cities where the insurer is building elderly care communities and hospitals.
Last year, Taikang bought an 80 percent stake in a public hospital in Nanjing and disclosed plans to complete elderly care communities in seven cities, including Beijing, Shanghai and Guangzhou, by 2018.
For joint-venture company Manulife-Sinochem Life Insurance Co, the complement to the insurance business lies in the investment sector.
Manulife is one of the five insurers with a license to market mutual fund products and is the only one that has officially started selling mutual fund products, in tandem with partner Manulife Teda Fund Management Co.
Based on Manulife’s experience in Western markets, mutual fund products, and especially bond funds, are expected to gain wider popularity as individual investors mature.
“It is a very long process, training our agents to be qualified to understand the investment needs of clients and sell mutual fund products,” said Zhang Kai, president and CEO of Manulife-Sinochem. “We do not expect the new business to bring in much revenue in the near future. It will be a long-term commitment trying to offer additional investment value to our insurance clients.”
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