Shift towards digital insurance and its regulation

25 Окт

Ping An Insurance, относительный новичок в страховой отрасли, теперь входит в число крупнейших страховщиков в мире. Примечательно использование новых технологий и бизнес-моделей, которые дополняют основные продукты страхования, что соответствует глобальной тенденции.

Вследствие глобального финансового кризиса 2008 года страховщики и перестраховщики в крупных страховых юрисдикциях столкнулись с более низкими процентными ставками и повышенными требованиями к капиталу. Недавно произошел переход к менее капиталоемким моделям ведения страхового бизнеса на зрелых западных рынках. В Китае принят Закон об электронной торговле. Как только он вступит в силу с 1 января 2019 года, впервые будет обеспечено регулирование электронной торговли, защита прав и интересов потребителей, а также личной информации в киберпространстве.

Market considerations

Ping An Insurance (Group), a relative newcomer to the insurance industry, now ranks among the world’s largest and most valuable insurers,(1) with more than 160 million customers.(2) Notably, its use of technology to embrace new business models that supplement its core insurance offerings is indicative of a wider global trend of providing customers with digital, value-added services.

Significantly, Ping An has recognised the gains to be had by engaging with newer, more innovative online distribution models to connect with consumers, investing approximately $1 billion per year into internet development(3) and spending $1.5 billion in this regard in 2017 alone.(4) This parallels similar moves by insurers in other major jurisdictions.


In the wake of the 2008 global financial crisis, insurers and reinsurers in the major insurance jurisdictions have faced a climate of lower interest rates and increased regulatory and capital requirements. Coupled with a lack of growth in their own mature markets, some insurers are now stepping out of their core insurance markets to identify new sources of revenue.

As such, there has been a recent shift towards less capital-intensive models for doing insurance business in mature western markets, as evidenced by the measures certain insurers and reinsurers have taken to offload some of the more capital-intensive parts of their business, including annuities and guaranteed products.(5) Standard Life is an example of a well-known UK based insurer that has shifted away from the traditional insurance market altogether, merging with a global asset manager and taking steps to sell its legacy insurance business.(6) For certain reinsurers that have found growth hard to come by, this has meant moving reinsurance risk off the books in the form of insurance-linked securities that can be sold to investors, while generating revenue in the form of arrangement and advisory fees.(7)

However, this is not the case in China. While Ping An has branched out from its property insurance roots (‘Ping An’ literally means ‘safe and well’) to encompass diversified financial services in banking and asset management, its core insurance businesses continue to show rising growth and profitability alongside its increasing solvency ratios.(8) For instance, for its life and health insurance businesses, net profits and assets were up 36.3% and 29.7% (on a year-on-year and year-to-date basis, respectively) as of June 2017.(9) These figures reflect the trend for the wider Chinese insurance industry in general, for which growth continues unabated. This aligns with the government’s plan to double the rate of ‘insurance penetration’ (ie, insurance premiums as a percentage of gross domestic product) from its previous level of approximately 2.4% to 5% by 2020. By this date, insurance premium income is expected to have reached Rmb4.5 trillion, with total industry assets of Rmb25 trillion, by which point China would likely be the world’s largest insurance market.

In addition to the differences in the maturity levels of the insurance markets in which they operate, insurers are looking to increase customer loyalty and derive additional revenue streams through new business models that go beyond merely assessing risk, selling policies and processing claims. Online distribution channels now offer a more personalised means for bringing value-added services to customers by tapping into an ecosystem of interconnected services for home, automobile, health and life insurance customers.(10) In so doing, the large traditional players, accompanied by newer digital disruptors and technology companies crossing over into insurance, are seeking to increase customer engagement, differentiate themselves and build loyalty to their brand.

As an early adopter in this regard, Ping An now houses one of the largest Big Data platforms of all Chinese financial institutions, with over 500 Big Data scientists and 20,000 technological R&D staff members. Further, it continues to develop and use technologies involving human face recognition, voiceprint recognition, artificial intelligence and blockchain, among others.(11) Its image-based loss verification uses image recognition and deep learning technology to significantly speed up claims services, and its Jin Guan Jia app – with more than 120 million registered users(12) – uses videos, facial recognition and e-signatures to effectively identify customers and help reduce operational costs. Another app that stands out for its wide market adoption and novel use of technology is Ping An’s Good Doctor online healthcare platform, which was recently listed on the Hong Kong stock exchange(13) and is now in the process of exporting its services to other countries through a recent tie-up with the Southeast Asian app Grab.(14) The Good Doctor app is known for using artificial intelligence to guide the consultation process for online medical consultations, medicine delivery and appointment bookings made through its online platform.

In China, the proportion of mobile users who are willing to engage with and purchase online services is much higher than in most western countries, so Chinese insurers have a natural advantage in adopting these new business models over most of their global counterparts. Despite this, some reported successes in Europe include:

AXA’s smart-home applications that, for example, connect homeowners remotely to sensors and cameras that can spot intruders, control lighting, detect smoke and monitor water leaks;(15)
Qare, a virtual medical clinic offered by an AXA-funded start-up that, similarly to the Good Doctor app, gives people access to French doctors via their mobile phone for a monthly fee.(16)
Further, Aviva is one of a few insurers offering a ‘dash cam’ to monitor driving and record any potential incidents, which is tied to car insurance discounts for users.(17) The general feedback is that customers are more willing to pay higher premiums and increase their loyalty to insurers that offer the value-added, interactive services that they desire.

The significance of these value-added insurance-related services is that they offer a supplementary new business model that can:

attract new customers;
provide a window for differentiation in the insurance market;
help to engage and retain existing customers and foster loyalty;
provide new streams of revenue and growth;
provide a platform for cross-selling other insurance products;
act as a source of digital data that can be used to evaluate and underwrite risk more efficiently and offer discounts to users; and
provide a digital platform for more efficient claims processing.
Out of the countries recently surveyed, China had the highest proportion of respondents (87%) that identified themselves as willing to switch to another insurance provider for their desired ecosystem services.(18)

Market considerations

The insurance industry’s evolution towards value-added ecosystem-related services and the potential advantages on offer is marked by a specific set of market considerations in China.

First, the underlying market for core-insurance services has yet to reach the same level of maturity as other major insurance jurisdictions, so the shift towards embracing newer digital products is borne out of business opportunity rather than necessity. Further, policy announcements and the regulatory environment play a stronger hand in directing the Chinese insurance market, which means that these new business lines are intended to supplement core-insurance services, rather than constitute a means for scaling them back. This is reflected, for instance, by the way in which China’s risk-based supervisory regime, the China Risk-Oriented Solvency System (C-ROSS), operates to place lower capital adequacy requirements on insurers that offer a greater diversification of products and services to consumers. This is also backed by recent measures to clamp down on the sale of universal insurance investment products that the insurance authority has said «deviate from the fundamental origin of insurance».(19) The net result is that for most traditional Chinese insurers, the market for digital insurance-related products presents a profitable, complementary means for developing their customer base in an industry that is traditionally short on loyalty, rather than an opportunity to reallocate resources away from its core insurance services.

Further, the Chinese insurance regulator faces the ongoing challenge of regulating this new and rapidly developing subsector. It cannot draw on the precedents of other jurisdictions for guidance in developing an appropriate framework to the same extent that it has in the past (eg, as it did with C-ROSS). On 31 August 2018 – demonstrating the urgent need to regulate electronic commerce, including digital insurance – the Standing Committee of the National People’s Congress promulgated the Law on Electronic Commerce. Once it comes into effect on 1 January 2019, this new law will provide, for the first time, a central body of regulation for e-commerce which aims to protect consumer rights and interests, personal information, IP rights, cyberspace security and the environment, among other priorities.(20)


(1) «Tech giants brand value on the up».

(2) Further information is available here.

(3) Further information is available here.

(4) Further information is available here.

(5) Further information is available here.

(6) Further information is available here.

(7) Further information is available here.

(8) Ping An Annual Report 2016 and Interim Report 2017

(9) Ping An Interim Report 2017

(10) Further information is available here.

(11) Ping An Interim Report 2017

(12) As at June 30, 2017; Ping An Interim Report 2017

(13) Further information is available here.

(14) Further information is available here.

(15) Further information is available here.

(16) Further information is available here.

(17) Further information is available here.

(18) Per Figure 32, here.

(19) Further information is available here.

(20) Further information is available here.

Авторы: Xuelei Wang, Yu Dan, Chen Jun, Sharif Hendry