The increasing ubiquity of internet use in China, in particular the rise of mobile internet technology, has lowered boundaries among industries and enterprises and led to the development of cross-industry and cross-border businesses in the country.
As a gauge, Mr Lee Yuansiong cited the massive size and potential of individual customers and internet users, which number 143 million and 403 million respectively. Among these, mobile app users number 288 million, but the count will undoubtedly continue to grow.
Thus, it is this sole challenge that Ping An sees as it assesses the Chinese insurance market today, that has shaped its ongoing transformation strategy and ambition. Since its establishment in 1988 in Shenzhen, Ping An has developed from a property insurance company into an integrated financial services conglomerate – and is now on its way in reinventing itself from a traditional financial services provider to a heavyweight in the internet finance space.
The group managed to successfully transform its core business, incubating its internet finance ventures including Ping An Good Doctor, which has provided health management services to over 160 million users as at mid-2017; Lufax Holding, an internet finance platform designed as a one-stop shop for transaction information and services; and Finance OneConnect, an effort to further boost and integrate customer management services in the insurance industry.
Contemplating the keys to its success in taking on disruption and innovation, Mr Lee noted that the company “pays great attention to the development of advanced technologies” and proactively seeks to apply them to their business operations and customer service.
“On the road of technology innovation, we always strive to be at the forefront among industry players. And in recent years, we’ve seen our efforts in AI, Big Data and cloud computing – which have supported and led our core business reform – pay off.”
Among its recent achievements, he shared that the insurer pioneered image-based loss verification in the market, using image recognition and deep learning to significantly speed up claims services. It also claims that its proprietary face-recognition technology has an accuracy rate of 99.8% and has been applied in over 200 scenarios.
“We’ve built [probably] the biggest cloud platform in the financial industry and ensured it fulfils the highest financial security standards. More than 70% of our core businesses are connected to the cloud,” he added.
A second and crucial factor, is backing its commitment to innovation and new tech with cold, hard cash. Ping An Group, he said, invests about 1% of its revenue in research and development of greenfield technologies. In the last decade, it has spent over CNY50 billion (US$7.5 billion) in the areas of FinTech, health tech and AI – to date, the Group holds 1,458 patent registrations, the most among Chinese financial institutions.
Of course, Mr Lee noted that all these milestones could not have been achieved without its “world-leading team with the best technology capabilities among global financial institutions”, which the company has taken pains to recruit; its talent pool boasts over 20,000 internal IT developers and 500 data engineers.
2017 set to break records?
Meanwhile, the Chinese giant has not neglected its traditional business, and has also leveraged both internet and AI technology to improve its sales force, customer experience and internal operational efficiency among others, to keep its market-leading edge.
As for results, the Group’s net profit in 2016 rose by 15.1% to CNY62.39 billion. For 2017, its profit growth trajectory looks set to defy gravity again –in 1H2017, Ping An Life realised CNY22.6 million in net profit, up by 34.8% y-o-y, while Ping An Property & Casualty reported a 23.5% growth in premium income to CNY103.44 million.
Despite a significant market dampener in the form of the CIRC’s earlier crackdown on short-term universal life insurance products, which negatively affected many life insurers’ income from investment-type premium products in 1H2017 – the company’s new business value (premiums) for life and health insurance soared by 46.2% to CNY38.55 million.
But for Ping An, Mr Lee said its universal insurance cover is mainly sold via their agents as a “high-value long-term protection product” with a focus on providing its clients comprehensive protection on life, critical illness and accidents. And because of its “full protection coverage and flexible premium payment methods”, which reflect its “protection-oriented product philosophy”, the cover is still seeing good demand and popularity among its agents and customers.
Turning to the future, he noted the local insurance industry continues to show signs of robust development and potential. Pointing to the Belt-Road Initiative, he said insurers like Ping An will be able to benefit in multiple areas, such as offering diversified capital support, risk protection, as well as even integrated employee benefit services.
“China’s life insurance penetration is far below the global average. We are also entering a period of rising household incomes; escalating middle-class spending power; expanding ageing populations and a reliving of the second-child policy, all alongside a growing awareness of insurance. So I believe all of these will contribute huge growth to the Chinese insurance market.” A
In the life insurance segment, Ping An Life developed two core apps to serve up innovative relationship management and sales – the “Jin Guan Jia” app (loosely translated as financial steward) for customers, and the “Pocket E” app for its agents.
With “Pocket E”, management – using AI tech and the internet – can plan and manage its agents’ career development, offer remote online training, as well as provide “fully vertical online sales support”.
Mr Lee Yuansiong, Executive Vice President and Ping An Group’s Chief Insurance Business Officer, added that AI and internet are also used for risk management. “Biological verification technology is used for filtering qualified agents, and identifying high-risk behaviours. A related [version] is also used for risk verification and monitoring.”
As for “Jin Guan Jia”, the insurer can leverage videos, facial recognition and e-signatures to effectively identify customers, which helps greatly in reducing operational costs.
Using Big Data and AI
In the P&C space, Ping An Property & Casualty created the “Ping An Auto Owner” app, and using Big Data and AI, introduced innovative channels and products, risk verification and online automated services.
The app offers an “online part-time agent sales channel” and Big Data and AI insights help provide new pricing factors that allow the company to competitively price its products, he said.
Customers also benefit from “immediate damage identification”, achieved with the help of image verification tech and video.
As at end-June 2017, the “ Ping An Auto Owner” app has 23.3 million drivers registered on it, while “Jin Guan Jia” users have crossed 120 million. Meanwhile, “Pocket E” is being used by 1.3 million agents to provide services to customers.
|G-SII - Badge of honour
Separately in 2013, the Chinese conglomerate was identified as a global systemically important insurer (G-SII) – the only Asian insurer in a list of nine – by the Financial Stability Board. At home, Ping An Insurance is also considered a domestic SII. While many companies appear less than pleased to receive such a label, Ping An seems to wear it as a badge of honour.
In fact, with the accreditation, the Group has taken the opportunity to beef up and deploy its nationwide risk management and control infrastructure, named the “251 Risk Management System”, which aims to offer “full-fledged risk management through leveraging Big Data and smart technologies”, Mr Lee Yuansiong, Executive Vice President and Ping An Group’s Chief Insurance Business Officer said. “We believe this comprehensive and effective risk management system will offer confidence to our investors, shareholders and customers.”