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China: Insurance behemoth rolls with the times

Tags: China, Life & Health, Regulation

Chinese giant Ping An Group is synonymous with innovation and progress in the industry. In this exclusive, Executive Vice President and Chief Insurance Business Officer Lee Yuansiong shares tips on blazing the innovation trail.

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.

Breakthrough factors

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. 

Abundant potential

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 persified 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.”

Tags: China, Life & Health, Regulation

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