The share of premiums that P&C insurers collect through their own online channels has declined, while the share of third-party online platforms has gradually increased. The August "Monthly Overview of Internet and Telephone Sales of Property Insurance" released by the Insurance Association of China shows that in the first eight months of this year, P&C insurers achieved premium income of RMB 16.865 billion through their PC official websites and mobile terminals, accounting for 52.59% of online P&C premiums—a notable decline from 67.75% at the end of last year.
Declining share of self-operated channels
The self-built online sales channels of P&C insurers once contributed a large amount of premium income. From January to December 2016, P&C insurers achieved cumulative premium income of RMB 27.784 billion through their PC official websites, accounting for 55.31% of online P&C business. But in the first eight months of this year, this figure shrank sharply to 17.26%.
At the same time, the contribution of intermediary channels—especially third-party online platforms—rose significantly, with the two together accounting for 44.13%, compared with only 29.5% at the end of last year. Among them, premiums realized through professional insurance intermediaries reached RMB 4.129 billion, or 12.88%, higher than the 10.98% at the end of last year; cumulative premiums realized through third-party online platforms reached RMB 10.022 billion, or 31.25%, a substantial increase from 18.52% at the end of last year.
Reporters learned that this phenomenon is mainly due to two reasons. First, much of the previous online P&C sales revenue came from referrals of agent business; after the comprehensive commercial auto insurance fee reform last year, the discount advantage of online sales channels was eliminated, and agent business was no longer put into the online sales basket. Second, since the end of last year, supervision of the compliance of P&C companies' expense allocation has been strengthened, and some traditional online channel business and expenses have been shifted into third-party channels. In addition, premiums of scenario-based insurance sold through third-party internet platforms have also grown markedly.
However, the premium contribution of mobile terminals within insurers' self-built channels has risen very quickly. The share of cumulative premium income realized through mobile terminals (apps, WAP and WeChat) rose from 12.44% last year to 35.33%. This shows that as users' consumption habits become increasingly mobile, the shift of insurance consumption from PCs to mobile phones is accelerating.
Scenario-based insurance becomes the main driver of innovation
At present, auto insurance remains the mainstay of online P&C insurance products, accounting for 63.83% of premiums in the first eight months. Among online non-auto insurance products, scenario-consumption products account for a very high share. The Monthly Overview shows that in the first eight months of this year, among the top 20 non-auto policies by sales volume, 15 hot-selling products were created for the online consumption environment, including nine online shopping return shipping insurance products launched by various companies.
Online-ecosystem scenario consumption is a newly emerging insurance consumption model in recent years, in which insurance companies embed their products into internet platforms, allowing customers to seamlessly purchase insurance in everyday consumption scenarios such as shopping and travel. This model has been welcomed by many insurance companies; large and medium-sized insurers such as PICC P&C, CPIC P&C, Taikang Online and ZhongAn Online have all launched online return shipping insurance. In addition, among hot-selling non-auto products, account security insurance and aviation accident insurance also account for relatively high shares.
However, most hot-selling products have low unit prices, making it difficult to generate scale effects. Eighteen of the top 20 non-auto policies by sales volume are insurance products priced below RMB 0.6 per unit. Some insurers are now trying to raise the average premium per policy of internet products—for example, the medical insurance products that have sold well since the beginning of this year have raised the average premium per policy to between RMB 100 and RMB 1,000.
The head of the mobile internet business department of one insurance company told reporters that after continuous testing, they found that many consumers can now accept buying insurance products priced within RMB 1,000 online, and that as insurance protection awareness improves, the public's psychological price ceiling will gradually be broken.
Bob Kerzner, President and CEO of LIMRA and LOMA, previously told reporters that mobile payment methods have greatly changed people's living habits, which will have an important impact on the financial landscape. At present, insurers' penetration is far from sufficient, and greater efforts are needed to explore selling insurance products through technological means.
Source: Securities Times 2017-10-20