With the fast-developing technologies of big data, artificial intelligence (AI) and blockchain among others, China’s traditional insurance companies have been exploring a new and promising way to upgrade their operations in areas of risk management, actuarial services and leveraging.
Some domestic insurance giants such as China’s Ping An Insurance and the China Pacific Insurance Company have successively released their digitalized insurance products. The China Pacific Insurance Company, for example, launched its online AI insurance consultant app last year, which offered users recommendations for insurance products through AI technology based on their answers to a myriad of questions.
Also, the People’s Insurance Company of China (PICC) signed in April a deal with Huawei and Alibaba’s financial arm Ant Financial in a bid to push forward the digitalization of its operations and business models.
Moreover, remarkable business growth have also been observed for InsurTech companies since 2017. The InsurTech startups amounted to nearly 200 by the end of 2017, with a total of 43 fund-raising activities occurring last year, attracting an aggregated amount of 1.608 billion yuan. The national well-known tech giants like Alibaba, Tencent and Baidu had invested in 11 companies who held insurance licenses, official data showed.
“Technology improves the efficiency where it enhances the R&D for insurance products as well as their pricing models. Also, it improves the after-sales services by dealing with assured claims automatically and accurately,” said Zhou Yanli, former vice chairman of the China Insurance Regulatory Commission.
For instance, blockchain technology could especially help the insurance industry in building an objective, fair and reliable credit system, so that frictions in insurance transaction could be further reduced and the costs be lowered, Zhou said.
Experts commented that the application of technology into insurance have made the process for purchasing insurance products more convenient, while making the product prices more affordable.
“I think insurance products are too expensive now, and technologies allow insurance companies to prevent risks, such as cyber-related risks, while enhancing the business model for insurance,” said Luca P. Marighetti, the Head of Tech-Transformation of Swiss Re, one of the world’s largest reinsurance company, “we need to move to the value-creation stage where we can research specific tech applications for specific links in the value chain of the insurance industry. Also, we are at the beginning stage in this process.”
For the purpose of the insurance industry to benefit the whole society, it is desirable that technology will continue to expand its coverage and penetration in the industry, for the benefits of both insurance companies and their clients.
Although Chinese insurance companies have begun to strive for their transformation in insurance towards digitalization for high-quality growth, they still have to face great challenges, for example, the lack of talents who are good at the insurance business while understanding digitalization.
Apart from that, foreign insurance brokers are also looking to expand their businesses in China amid the country’s efforts to further open its financial market to foreign investors, which will definitely cause pressures to the domestic insurance companies who may find difficult to easily gain favor of their own people like before.