Evolving Digital Business Models: How China Is Advancing the Insurance Proposition to Take Advantage of the Digital Age

by Wenli Yuan, July 15, 2015
Industry Trends
Asia-Pacific

Abstract

Under the new insurance Internet ecosystem, insurance companies are using Internet thinking to bring innovation to products and services.

In the report Evolving Digital Business Models: How China Is Advancing the Insurance Proposition to Take Advantage of the Digital Age, Celent analyses the insurance Internet ecosystem, defines Internet thinking, and introduces how Internet thinking has been used in the Chinese insurance industry. Celent also summarizes what other parts of the world can learn from Internet thinking by China insurers.

Under the pan-Internet environment, no business is isolated any more. E-business platforms, mobile payment platforms, and social networks are increasingly playing an important and controlling role in China. Insurance companies have started to consider themselves part of a larger ecosystem, and are rethinking their relationship with vertical industry platforms, third party e-business platforms, WeChat, Alipay Wallet, traditional channels, and strategic partners.

Insurance companies are using Internet thinking to bring innovation to their products and services. “Internet” here is not a narrow definition just referring to the Worldwide Web, but a wider concept which also includes social media, mobile apps, gadgets, and other digital services. Internet thinking means developing business models based on concepts such as free (or almost free) services, the user as king, user experience, the social economy, and data and analytics driven businesses.

In the report Celent introduces many examples of how insurance companies in China acquire a large consumer base through providing free or almost free products and services, how they improve user experience through simplified products and processes, intuitive user interfaces, gamification, and other digital services. The report also discusses how they develop products and services that enable and encourage people to share, and how they leverage big data and analytics to provide personalized products, services, and marketing.

Observers outside China may be aware of the innovation that is happening in China, but often draw a quick conclusion that because their markets lack huge business volumes, such innovative models do not apply to their country. Celent believes that other parts of the world can learn from China by leveraging Internet thinking in the insurance business.

“Insurance companies used to think of themselves as the center of the insurance business ecosystem,” says Wenli Yuan, a senior analyst with Celent’s Asian Financial Services group and author of the report. “Insurers need to rethink the business model in the new ecosystem, expand the business value chain to provide scenario-based services, or retract to become pure capacity players/underwriters.”

In the upcoming report Digital Strategies in Insurance: Lessons from China, Celent will suggest a digital strategy to enable initiatives arising from Internet thinking to be sustainable.

This report contains three tables and one figure.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

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Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

 

Online Insurance Is Growing Rapidly

2

 

Internet Companies Are Disrupting Financial Services

2

Insurance Internet Ecosystem

4

 

E-Business Platforms

4

 

Mobile Social Media: WeChat

5

 

Mobile Platforms and Apps

6

 

Agents, Brokers, and Agencies

8

 

Mobile Payment Platform

8

 

Scenario-Based Service

9

 

Insurance Internet Ecosystem

9

Internet Thinking in the Chinese Insurance Industry

11

Acquire Large Customer Base

13

 

Provide Free or Almost Free Products and Services

13

 

Support Low Value or Fragmented Transactions

13

Improve User Experience Through Simplified Product and Process, Intuitive UI, and Gamification

15

 

Simplified Product and Process

15

 

Intuitive User Interfaces

16

 

Fun and Cool Factor

16

 

Leverage Consumers’ Fragmented Time

16

 

Support for Multichannel Communication

17

 

Self-Service and Automatic Service

17

Enable and Encourage Sharing

18

 

Red Envelope

18

 

Crowdfunding

18

Personalization Driven by Data and Analytics

20

 

Provide Low-Cost Products to Certain Market Segments

20

 

Pricing Method Evolution

20

 

Differentiate Pricing and Improve Customers’ Risk Level

20

 

Data and Analytics Topics

21

 

Example: Telematics Data

23

Business Models Need to Change

25

Conclusion

26

Leveraging Celent’s Expertise

28

 

Support for Financial Institutions

28

 

Support for Vendors

28

Related Celent Research

29

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