[Column] Implications of Chinese Big Tech Platforms Entering the Insurance Industry

Seobonggyo Dongduk Women's University Department of Chinese Studies Professor

Fintech (finance + technology), which began with simple payment and remittance services, is rapidly expanding into traditional financial sectors such as microloans, postpaid payments, and insurance. In Korea, fintech platforms like Kakao, Naver, and Toss are actively entering the postpaid payment, microloan, and insurance industries.

China is recognized as having the most advanced fintech industry in the world, with major fintech platforms known as big techs, such as Alipay and Tencent, having developed significantly. These big tech platforms started offering simple payment and remittance services in the early 2010s, and from the mid-2010s, they have also provided services like postpaid payments, microloans, and automobile and indemnity insurance.

According to the China Insurance Association, as of the end of last year, mobile payment platforms like Alipay accounted for 42% of the total online property insurance sales channels in China. The top company in the online property insurance market is ZhongAn Insurance, China’s first online property insurer established in 2013 by Alibaba and Tencent, which held a 21% market share at the end of last year.

Interestingly, the leading property insurer overall, People’s Insurance Company of China (PICC), holds only a 9% share in online property insurance, ranking third, while Taikang Online, ranked within the top 10 in overall property insurance, holds 12%, placing second. Taikang Online was established as an online property insurer in November 2015. It jumped from 49th in the overall property insurance market share in 2016 to 22nd in 2019, with premium income increasing sevenfold over three years, achieving an average annual growth rate of 97%. Last year, it recorded an 83% increase in premiums, significantly outperforming the overall property insurance growth rate in China, which is about 5%. Taikang Online’s competitiveness can be summarized as follows.

First, Taikang Online is a "mobile app-based online property insurer without offline branches." This unified customer contact through smartphones reduced management costs and improved customer service convenience. At the same time, it drastically cut costs and time across all insurance services, such as premium calculation and claims processing, by utilizing artificial intelligence and mobile platforms.

Second, Taikang Online built a mobile Taikang ecosystem by integrating Taikang Life Insurance, China’s 7th largest life insurer established in 1996, Taikang Asset Management founded in 2006, and Taikang Healthcare established in 2018. By integrating mobile platforms in insurance, asset management, and healthcare, it provided a "unified mobile service window," guiding existing customers into new property insurance areas.

Third, Taikang Online actively collaborates with big tech platforms to develop various insurance products. What Taikang Online needs is big data information on customer demand. Accordingly, it has established partnerships with major big tech platforms such as JD.com and Alibaba’s e-commerce platforms, Tencent, China’s largest OTA travel platform Ctrip, and the car-sharing platform Didi. Taikang pursued a win-win strategy by offering diverse insurance products tailored to the customer characteristics of these platforms, including travel insurance, food liability insurance, delivery worker accident insurance, rental car insurance, dental insurance, medical insurance, and art insurance.

The three core strategies that enabled Taikang Online’s rapid growth provide significant insights for Korean financial companies contemplating how to respond to big tech platforms’ entry into the financial industry.

[Seobonggyo, Professor of Chinese Studies, Dongduk Women’s University]