Basic Information

  • Population: 1.418 billion
  • Location: Eastern Asia
  • Primary Language: Mandarin
  • Capital: Beijing

China’s Insurance Industry

Quick Background

The story of China’s insurance industry is a remarkable one. According to a study from Swiss Re, Chinese traders in 3,000 BC were the first in the world to develop the idea of risk diversification. In the 1800’s, foreign traders began introducing China to the modern concept of insurance, which is when the domestic Chinese insurance market first emerged.

Once the country finally united in 1949 after a series of foreign wars and a brutal civil war, a clearer picture of the insurance market began to emerge. China began rapidly building up its modern insurance market in the 1970s with the Chinese Communist Party.

When China joined the WTO in 2001, foreign insurers to begin operating in China. Around this time, the Chinese Insurance Regulatory Commission (CIRC) also began focusing its efforts on improving the education and training of its employees in actuarial science around this time.

China is now on track to become the second largest insurance market behind the U.S. within the coming decades. Reinsurance, micro-insurance, individual insurance, and public insurance are all large, growing markets in China. Some of the key issues driving investment in the industry include a massive aging population as well as more frequent natural disasters.

Major Players

As of November 2017, these are the biggest players in China’s insurance market:

Life Insurance

  1. China Life Insurance Co. Ltd (Chinese owned, based in Beijing)
  2. Ping An Life Insurance Co. of China Ltd. (Chinese owned, based in Shenzhen)
  3. Anbang Life Insurance Co. Ltd. (Chinese owned, based in Beijing)
  4. China Pacific Life Insurance Co. Ltd. (Chinese owned, based in Shanghai)
  5. PICC Life Insurance Co. Ltd. (Chinese owned, based in Shanghai)

P&C Insurance

  1. PICC Property and Casualty Co. Ltd. (Chinese owned, based in Beijing)
  2. Ping An Property & Casualty Insurance Co. of China Ltd. (Chinese owned, based in Shenzhen)
  3. China Pacific Property Insurance Co. Ltd. (Chinese owned, based in Shanghai)
  4. China Life Property & Casualty Insurance Co. Ltd. (Chinese owned, based in Beijing)
  5. China United Property Insurance Co. Ltd. (Chinese owned, based in Beijing)

China’s Top Reinsurer

  • China Reinsurance (Group) Corp. (Chinese owned, based in Beijing)

Regulation

The insurance industry in China is regulated by the China Insurance Regulatory Commission (CIRC), which is State Council authorized to conduct administration, supervision, and regulation of the Chinese insurance market to ensure compliance and stability in the industry.

From a customer perspective

According to a 2016 study by Boston Consultant Group (BCG), Chinese insurance consumers are adjusting to the revamped insurance market well. Trust and advocacy tends towards the larger, better known brands, but the study found that smaller, lesser known insurers’ products typically have a higher advocacy rating than their larger counterparts.

Here’s a look at what the study found from Chinese consumers’ satisfaction on different levels of the insurance process.

(source: Boston Consulting Group)

Insurtech in China

There’s endless opportunity for insurers in China right now because only 8 percent of China’s 1.4 billion people have life insurance at all. With over 725 million mobile users, an organized regulatory system supporting innovators, and the development of new services by tech giants like Alibaba, Baidu, and Tencent, the Chinese market is primed for insurtech - and investors and entrepreneurs are taking full advantage.

What’s fascinating about China’s insurtech industry is that, unlike in Western markets, China’s largest companies, both in tech and insurance, are working together to digitize the industry. This is due to a lack of uneven, restrictive regulation and legacy IT frameworks that hinder some of the large Western insurers from innovating and digitizing at a competitive pace. In this sense, the far shorter history of China’s insurance industry goes to its favor (Ping An is a great example of this).

In China, rather than smaller, newer companies looking to create completely different insurance offerings and competing with traditional insurers, a significant amount of insurtech innovation takes place within the large insurance and tech companies, with smaller companies providing services that ease customer access to these offerings through services like WeChat.

Collaborative efforts between the tech giants, Alibaba, Tencent, and Baidu, and the insurance/finance heavyweights like Ping An, Ant Financial, Taikang Insurance Group, and Sunshine Insurance Group, lead to digital innovation and offerings that have the resources, money, and access to market to pull off incredible innovation effectively and efficiently.

“Companies such as Alibaba and Tencent are extensively using big data to track users and behaviour across all touch points. 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.

The insurance companies that pull off these digital strategies are incredibly agile, reacting immediately to digital consumer feedback as soon as the market reacts.

Insurtech Highlight: Zhong An

Zhong An is the first digital insurer in China and was born out of a collaboration between Ant Financial, Ping An, and Tencent. Zhong An served as a test in many ways, allowing the larger companies to evaluate how the market reacts to a completely digital insurance company.

The company successfully uses AI and blockchain technologies to manage and settle online claims and help reduce fraud. It also boasts a cloud-based core IT system, keeping the cost of Zhong An’s computing power at relatively low.

Growth, adoption, and consumer response has been positive and strong. Since launching in 2013, Zhong An collected about $500 million in premiums in 2016, a 49 percent increase from 2015.

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