Baby steps on Internet

Clarence Wong, chief economist for Asia-Pacific at reinsurance company Swiss Re, said the idea of selling insurance policies via information technology is not new in the region even though the business is still in its initial phase of growth. Auto insurance and medical services are just two of the areas undergoing dramatic changes amid the online revolution, he noted.

Both life and non-life insurers will enjoy more scope for distribution through the Internet, said Wong, who predicts that online non-life insurance trading will eventually extend to home contents, travel and accident liability policies as well.

Auto insurance in particular, which has sparked interest among Internet companies and can be seen advertised everywhere in mainland cities, is expected to see a difference by trading online, said Terrence Wong, director of insurance at Fitch Ratings.

On Nov 11, the mainland online version of the Black Friday sales day in the US, Ping An hit a record daily sales volume of 3.7 billion yuan for its car insurance products, with more than 100 million yuan worth of insurance products sold within a few hours.

Terrence Wong noted that the development of online insurance business sets higher requirements for customers' understanding of the products, and thus such online business can only be expected to appeal to tech-savvy young customers.

On the supply side, simple products like short-term life insurance will be more suitable for reaching customers through the Internet, he suggested.

An insurance company's greatest strength lies in being equipped with an array of data about people's backgrounds, habits and interests, and that is exactly what technology firms could offer, added Clarence Wong.

From an insurance perspective, a huge data base can provide a much more accurate picture of the exposures, hazards and risks of the insured item or life.

The power of technology means major mainland insurers cannot wait to embrace a revolution driven by the booming Internet finance sector.

Privately owned Ping An, which controls separately listed Ping An Bank, has been actively trying to shift its business model toward Internet finance. Its affiliates include peer-to-peer lending platform lufax.com and online payment company 1qianbao.com.

"Internet finance is a must for traditional insurers. To some extent, it is something they feel compelled to do," said Ng. "If Ping An lags behind in this field, there will be no lack of competitors pursuing Internet finance more aggressively."

"To take the initiative in Internet finance and establish its own platform, Ping An wants to ensure it is taking a big share even as competitors get moving and fighting for the market," added Ng.

In fact, the importance of Internet finance is well-heeded by large insurers in emerging markets across the Asia Pacific and they are increasingly branching out region-wide, observed Terrence Wong.

But the number of deals the Internet platform has been able to generate so far is by no means enough.

"That is because it will really take time for the traditional insurance industry to redefine its business scope and models," said Terrence Wong. "Online and brick-and-mortar insurance businesses complement each other, and insurance agents will never completely disappear."

Contact the writer at sophia@chinadailyhk.com