Chinese P&C insurers' digitalisation efforts beat Hong Kong and Japan

Ping An P&C’s motor insurance service uses image recognition to provide repair estimates based on submitted pictures.

Chinese property and casualty (P&C) insurers are more open to embracing new technologies to enhance their product and service offerings than the more mature insurance markets of Hong Kong, Australia and Japan, according to Moody’s Investors Service. 

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The digitalisation of insurance in the country reflects the booming number of tech-savvy customers who are steadily embracing the digital shift as well as the insurers that have been meeting this demand, the credit rating agency noted.

For instance, Ping An P&C has developed a motor insurance service leverages on image recognition and AI to provide repair estimate of a damaged part based on image submission via its app, Ping An Auto Owner. The app also has the capability of capturing a driver’s behavior and vehicle usage.

CPPIC, on the other hand, has tapped on satellite imagery to ascertain the size of crop areas for agricultural insurance. PICC P&C is also set to expedite technology integration in 2018 with a focus on digital payments and insurance-related services.

“Insurers are also adopting technology to improve their underwriting and product research, which will enhance product design and diversification. These initiatives augment the industry's current efforts to expand its agriculture and liability lines,” Moody’s said in a report.

The technological integration, however, does more than boost premium growth and operating efficiency.

“Rising digital transactions and technology-enabled risk pricing foster a more diversified non-motor product suit to meet customer needs. In addition, a proliferation of digital tools, like the opening of insurance sales platform called WeSure on WeChat, makes insurance products more accessible to customers,” the credit rating agency added.

As incumbents ramp up their digitalisation efforts, tech titans are also steadily gunning for a slice of China’s vast insurance market. But Moody’s believes that penetrating the market might not be as easy even for Tencent, Ant Financial, and Baidu who are giants in their own right.

“Nevertheless, the chances of these technology entrants disrupting markets in the next 12-18 months is low. This is because insurance is a highly regulated industry and current regulations are focused on improving underwriting discipline and preventing irrational price competition,” Moody’s added.

Tech companies’ heavy online focus also restrict their available product lines to those that entail simple underwriting and require minimal offline servicing which would not fit with non-motor lines of agriculture, commercial property, and liability insurance segments.