E-commerce has come to the insurance sector, and the prospects are bright as mainland Web giants get in the game. Luo Weiteng gets the story.

The old-fashioned but lucrative insurance trade is attracting big names in mainland e-commerce, giants that seek to introduce new trading forms and entry points to the industry.

In December, the founders of mainland Internet giants Alibaba Group and Tencent Holdings bought shares in Ping An Insurance, the second-largest mainland insurer.

The move put Ping An in pole position to seize market share in the nation's fast-developing Internet finance sector.

The move marked the third instance of cooperation among the "Three Mas" - Alibaba founder Jack Ma Yun, Tencent's Pony Ma Huateng and Ma Mingzhe, chairman of Ping An.

Ping An, Alibaba and Tencent in October 2012 set up a new venture, named Zhong An Online Property Insurance. It is the mainland's first online insurance company and aims to tap the rapidly growing online sales sector.

According to the Insurance Association of China, online insurance sales involved a total of 62.2 billion yuan ($9.93 billion) in the first three quarters of 2014, at 195 percent higher posting nearly triple the full-year figures for 2013.

By the end of June last year, 50 life insurance companies had launched online sale businesses, three more than the 47 companies in the first quarter.

Taking on tradition

Andy Ng, Greater China Insurance leader at Ernst & Young in Hong Kong, believes online insurance - though an emerging business - will make a dent in the traditional property and casualty insurance sectors on the mainland.

The burgeoning mainland insurance industry, with 10 to 20 percent expected annual growth, could generate economies of scale for its online sales, said Ng.

Tencent's popular WeChat messaging platform is already able to provide third-party payment service, as well as wealth management product, credit card and money transfer services.

Ng pointed out it is a mere matter of time for insurance products to be bundled with WeChat.

"If that happens, explosive growth for online insurance business can be anticipated on the mainland," said Ng.

Given the large population, rising wealth levels and mainlanders' familiarity with trading on the Internet, it is no surprise that two of the leading mainland Internet moguls jumped on the chance to invest in the nation's second-biggest online insurer, said Dominicus Chim Che-kong, senior manager for client administration at BOCI-Prudential Trustee Ltd in Hong Kong. However, he does not expect online insurance to be a game changer for Hong Kong insurers since local customers still tend to trust human agents, preferably from among their friends or relatives, rather than buy policies in the virtual market.

The narrow local market makes it harder to achieve economies of scale with the insurance business going online, Ng at E&Y Insurance pointed out.

More importantly, the city does not boast Internet sensations like Alibaba and Tencent pushing the business and whose pioneering moves in Internet finance have created great opportunities for mainland insurers.