Innovative methods introduced to better serve customers are set to pay rewarding dividends

One of the leading foreign players in China's insurance market, Sino-US United MetLife Insurance Co Ltd, also known as MetLife China, aims to build a big data platform to provide tailor-made services for customers in the country.

Instead of managing separate sales channels and branches to offer services and get data, which was common practice in the past, the company, a joint venture between the largest United States life insurer, MetLife Inc, and Shanghai Alliance Investment Ltd, now views new technologies as the key to innovating its business model, said its CEO George Tan.

"Relying on data analysis, we can easily discover the changing demands and purchasing behavior of our customers. This allows us to produce personalized products and offer better pre-and-after services," said Tan.

The platform was opened in 2014 and its main structure is slated for completion in 2018.

Tan added that the platform is a prerequisite to boosting the company's long-term internet-based strategy.

In recent years, MetLife China has seen great success from its telephone marketing strategy and it now plans to integrate its traditional services with the internet and mobile apps.

"People can search online and find what they need, whether that is healthcare or endowments, rather than being recommended by us," he said.

The company is now in discussions with more than 20 partners, including social media enterprises, online retailers and e-commerce platforms of China's major banks.

Last year, the company sold insurance premiums totaling 7.04 billion yuan ($107.7 million), up 10 percent year-on-year. It made more than 499 million yuan in net profit, an increase of 30 percent from last year, according to its financial report.

With offices in 26 cities in China, the company offers life, accident and health insurance, as well as protection products.

Its inbound marketing strategy, which aims to reach potential customers via the internet, now accounts for a significant part of all its marketing.

Jack Ma, founder and executive chairman of China's e-commerce giant Alibaba Group Holding, told the annual meeting of China's insurance industry last month that, in the future, the insurance sector will pioneer technological innovations.

"The industry is actually the first to adopt the concept of big data as its actuarial analysts are the earliest data experts," he said. "In future, insurance companies' core staff will consist of data engineers rather than salespeople."

Statistics from the China Insurance Regulatory Commission show that in the first quarter of this year, the total premium sales of the internet-based life insurance business have soared to 82 billion yuan, up 205 percent year-on-year.

Third-party e-commerce platforms have played a key role in driving such rapid growth and as a result have become a new hotbed for investments.

Tan said foreign life insurers have certain advantages when it comes to expanding their businesses in China, due to both the internet and volatile market conditions.

"Different from those insurers who are chasing scale and speed, we focus more on the mass affluent market and have the ability to control risks," he said.

Compared to their local competitors, foreign insurers have a more stable risk management system for dealing with an economic downturn or fluctuations in the stock market, Tan said.

With a history of 150 years, MetLife Inc has seen numerous financial crises and wars come and go, and it has maintained a conservative approach to investing.

"A part of the financial industry, insurance is the supplier of long-term capital and the ballast stone for risk control," Tan said. "Demand will be rigid in future as people become increasingly aware of their growing needs.

"In terms of supply, we will add more effective resources such as healthcare and endowments to the market in the long-run," he said.

The company also has many specialists in insurance, financing, investment, risk management and information technology, he said.

Some 200 insurance companies are currently operating in China, compared to only five in the late 1980s. The country now ranks third globally in insurance provision by market volume.

In the first half of this year, the total insurance premiums sold by the industry reached 1.88 trillion yuan, up 37.3 percent year-on-year, to which foreign insurers contributed 95.9 billion yuan, accounting for 5 percent of the market, up 7.2 percent year-on-year.

Xiang Junbo, chairman of the China Insurance Regulatory Commission, said despite many uncertainties and financial risks, the industry is at a golden stage of its development in China's 13th Five-Year Plan (2016-20).

While maintaining its traditional domains, the industry should also find a win-win solution for both consumers and insurers in the mobile era, Xiang said.

Risk management is absolutely critical and the foundation on which the industry is built, so companies should improve their risk management capabilities and help to improve people's quality of life, he said.

"Our goal is to help insurance companies upgrade their asset-liability management including debt maturities, risks, earnings and liquidities," he added.

Last year, China's insurance penetration rate, which measures total insurance premiums in proportion to a country's GDP, stood at around 3.6 percent, compared to 8 or 9 percent in developed countries.

The country has set an insurance penetration rate target of 5 percent by 2020.

Hao Nan contributed to this story.

Transformative market trends

China's life insurance companies have maintained traditional sales channels through banks and agents in recent years.

Now, however, they are increasingly employing inbound marketing, which attempts to reach potential customers through social media and mobile apps.

Internet-based insurance is a new trend that is prompting the industry to upgrade its traditional services.

For example, banks can reach potential customers by providing insurance products and services at their e-commerce stores, and agents are able to offer such consulting services as investments, healthcare and endowments through digital technologies. The ability to peruse products and interact with insurers via apps also affords much greater convenience to customers.

There are also two further trends in the market that are transforming the economy and growing in popularity among Chinese customers.

One is all-round medical insurance, which aims to boost "a divided market for doctors, healthcare and medicine" as the supply for China's medical resources is currently insufficient and immature. The other is endowment insurance, as there is a need for combined services in medical treatment, healthcare and services, not just for nursing homes.

wangjinhui@chinadaily.com.cn