Developed in collaboration with CB Insights, the report revealed how China’ booming e-commerce is giving rise to new insurance products to meet demand for coverage on risks associated with online purchases.
An example would be free-return insurance that helps retailers to increase sales by providing additional security to consumers via free shipping for product returns. Some even allow buyers with good credit to receive refunds immediately, instead of when returned items are received by merchants. This shows how data can transfer to credit, build trust, innovate insurance models and ultimately facilitate business.
The report also noted that technology-based new entrants to the insurance industry now compete with traditional players by offering a more tailored and comprehensive range of products from a variety of carriers to a larger target market than insurers distributing traditional products through captive agency and bancassurance channels.
The report also noted how tech giants armed with big data capabilities are playing a growing role in the evolving insurance value chain. The drive to differentiate has led to different strategies to establish presence and penetrate the market including:
- Partnerships with multinational insurers to leverage global insurance capabilities and risk management expertise. Cases include Yunfeng Financial’s acquisition of MassMutual Asia and Tencent’s purchase of Aviva Hong Kong among others.
- Establishment of De Novo insurers by leveraging big data and technology capabilities. One such case is Alibaba-backed Zhong An, China's first online-only insurance company.
- Building technology-enabled distribution platforms to provide a “one-stop shop” for insurance products and services, including pricing and policy comparison tools, artificial intelligence-enabled consultation services and efficient online payment platforms. Cases include Taobao Insurance and JD Insurance.
“Existing products in China are highly commoditized with limited variation. The market is dominated by leading insurers that have minimal incentive to innovate. Technology advancements now enable smaller players to compete with established ones by offering all kinds of new products through new distribution models,” said Selina Hu, Executive Director at Willis Towers Watson Securities. “Technology development has also enabled entrants outside of the insurance industry. As Internet giants join the sector, the market has become more diversified and efficient.”
Insurers in emerging markets are introducing innovative solutions faster than their peers in more developed insurance markets as advances in Insurtech make it easier, quicker and cheaper for them to accurately assess customer behavior, needs and risks, thereby opening the door to new business models.