The China Insurance Regulatory Commission (CIRC) has highlighted that the fast-gorwing online insurance market in the country suffers from four main problems: product homogeneity; inadequate application of new technology, lack of product depth and cyber security risks.
At present, the main products offered by online insurers are motor insurance, universal insurance, short-term accident insurance and other standard products. Where special insurance policies are marketed, they tend to be gimmicky in nature and deviated from the principles of insurance.
For instance, Ping An Insurance Group Co of China, the country's second biggest life insurer, offered last year an "Accidental Pregnancy Before Honeymoon" policy to cover the cost of having to unexpectedly cancel a honeymoon. Ancheng Insurance marketed a policy covering any medical costs incurred as a result of being scalded while having a hotpot dinner. During last year's World Cup football tournament, several insurers offered policies to cover against over-drinking, being attacked by hooligans and disappointment for when their favourite team was eliminated
CIRC conceded that Internet insurance has its advantages. For instance, it helped minimised customer disputes in e-commerce by offering cover for shipping costs in the event that goods sold are returned to e-retailers. In addition, the micro-credit insurance services of some insurers have eased financing pressures faced by micro enterprises.
However, online insurers rely heavily on the Internet system, and network security risks cannot be ignored. CIRC noted that many insurers need to enhance the security of their information management system and authorisation management system as well as improve data encryption, to avoid major cyber security breaches.
The Chinese online insurance market saw premiums soar by 195% to CNY85.9 billion (US$13.8 billion) in 2014, representing 4.2% of total premiums in the industry. The number of insurance firms with online operations increased by 26 to 85 last year, comprising 58 domestic and 27 foreign insurance ventures. Sixty nine of them ran online businesses through their own websites and 68 teamed up with third-party e-commerce platforms. Among them, 52 did both.