An Era of "Copy from China": ZhongAn unveils its international strategy to export cutting-edge insurtech offerings in Asia and Belt and Road Countries
HONG KONG, Dec. 27, 2019 /PRNewswire/ -- "Technology export to Asia and Belt and Road countries is going to be one of the main thrusts for digital insurer ZhongAn in the next few years," said Mr Bill SONG, CEO of ZA Tech Global Limited ("ZA Tech"), an operating entity established by ZhongAn Technologies International Group Limited.
"ZhongAn has a very strong track record in China in terms of providing internet-based insurance offerings to the new generation," said Mr Song at ZhongAn's open day held in Shanghai. "The demographics in Southeast Asia spell a massive opportunity for insurance digitalisation. We are seeking to work closely with both insurance companies and internet platforms to re-engineer their customer relationships, and re-imagine the industry landscape."
Insurtech has been gaining traction steadily. According to an insurance industry report by Deloitte released in September, global insurtech investment reached USD 2.22 billion in 1H 2019, and the full-year figure is expected to surpass the historical high recorded in 2015.
ZhongAn finds the Southeast Asia market particularly promising because of various factors. Demographically, Southeast Asia is more youthful than Europe: the age of its 600 million population average at around 30 years old.
More importantly, internet penetration rate in the region has been recording double-digit growth each year since 2016, while the penetration rate of insurance remains low in the region apart from Singapore. According to Swiss Re Institute's sigma report, insurance penetration rate in Southeast Asia is only 3.77%, or 3.26% excluding Singapore. It is just barely more than half of the global penetration rate of 6.13%.
"We see a niche market for ZhongAn in Southeast Asia in terms of insurtech," said Mr Song. "There are several pain points in the Southeast Asia market: traditional insurance products can be too complicated and costly to customers. On the other hand, insurance companies need a new way to reach out to the young generation who are used to living in a connected world, as opposed to the traditional model where insurance companies heavily rely on brokers and banks to distribute their products," said Mr Song. "This is where ZhongAn finds its sweet spot: with technology, we change the way insurance products are created and distributed, and make insurance much more accessible to the users."
ZhongAn has a strong track record in Southeast Asia. Earlier this year, it has set up a joint venture, GrabInsure, with Grab, a leading O2O platform in Southeast Asia, to explore the online insurance distribution business in the region. ZhongAn is responsible for building up a digitalized insurance sales platform, and for providing the necessary technical support. With the technical support from ZhongAn, Grab has already issued over 4 million insurance policies between April and November this year, and is expected to offer more than 100 million insurance policies in 2020.
The usage-based insurance technology by ZhongAn has also enabled GrabInsure to open up new markets in Singapore and Malaysia. In Singapore, GrabInsure has partnered with NTUC Income to launch Critical Illness Pay Per Trip (CIPPT), the first micro-insurance plan in Southeast Asia. The product offers critical illness coverage for Grab drivers, who can pay with each trip made on their driving apps, with the premiums being set between S$0.10 to S$0.50 per each trip made on their driver apps. It covers 37 types of critical illnesses, including heart disease, cancer, and stroke.
The insurance coverage applicable to their plan depends on the number of trips and the sum of the premium payments, and it can add up to as much as S$200,000 for 360 days. It was hailed as a game changer as there is no minimum trip requirement or minimum premium payment per day. Drivers just pay as they work, enjoying the coverage without being burdened with any regular premium payment.
In Malaysia, ZhongAn once again tailor-made a suite of insurtech offerings, including user-based insurance technology, to enable Grab to launch a usage-based online motor insurance product in partnership with 16 insurance companies who act as underwriters.
Under the existing regulations, drivers in Malaysia are required to purchase an e-hailing insurance, which is several times more expensive than the regular existing motor insurance. The hefty motor insurance cost is a common issue faced by more than 150,000 Grab drivers in Malaysia, about 80 per cent of which are private vehicle owners working as a Grab driver on a part-time basis. The usage-based online motor insurance product talked to the heart of the issue -- Grab drivers will only have to pay one to two ringgits per trip made as premium. It has achieved great success in the market: more than 41,000 drivers subscribed within the first three weeks of the product launch.
"We want to export our technologies from China to Asia and the Belt and Road countries and be the trusted partner in driving digitalisation across the global insurance industry," said Mr Song. In fact, ZhongAn has already had footprint outside of Southeast Asia -- in Japan, it had partnered with Sompo Japan Insurance Inc. (SOMPO) to upgrade its insurance core system. As a result, SOMPO has successfully launched its first earthquake insurance policy via Line, the most popular messaging app in Japan.
Many insurance companies, like SOMPO, have to overcome the hefty costs in restructuring their IT core system as they digitalise their business, Song said. ZhongAn is able to offer insurtech solutions that are efficient as well as cost-effective: for example, its Graphene, a digital core insurance system, enables insurance companies to synergise their channels within a week, launch new products in three days, and process up to 32,000 insurance policies per second. It is also highly flexible and compatible with the existing IT systems. Fusion, on the other hand, is an internet insurance platform system. It has already issued over 4 million insurance policies since its launch in 2019 April.
"We are proud to have witnessed the success of the technology export business of ZhongAn," Mr Song said. "While staying true to our roots in China, we will continue to expand our footprint in Asia and the Belt and Road countries. We strive to be the ideal partner for digital transformation of the global insurance industry."
About ZA Tech Global Limited
ZA Tech Global Limited is an operating entity established by ZhongAn Technologies International Group Limited ("ZA International"), the international arm of ZhongAn Online P&C Insurance Co. Limited (HKEx stock code: 6060) and SoftBank Vision Fund as a key strategic investor in May 2018. The company aims to boost ZhongAn's technology solutions businesses outside China, focusing on insurtech, fintech and other technology solutions businesses in overseas market with an initial focus in Asia.