A new report estimated that China’s insurtech market would grow 36.88 percent CAGR between 2022 and 2031 to reach 34.05 trillion yuan (US$4.76 trillion). In 2021 alone, the market’s revenue was 1514 billion yuan (US$211.7 billion), according to Research Nester, a leading service provider for strategic market research and consulting.

The report attributed the explosive surge to the increasing use of smartphones in the country, with the world’s largest population at over 1.45 billion people. In 2020, it was estimated that more than 160 million 5G devices were sold. That’s over 50 percent of all smartphone shipments. That year also saw an estimated 989 million internet users, according to China Internet Network Information Center (CNNIC). 

The rise in internet access and use is continuously enhanced by China’s massive investment in digital transformation. The country is committed to investing around 7.15 trillion yuan (US$1 trillion) over six years into the local digital company, developing everything from 5G wireless networks to artificial intelligence. 

User data generated from their smartphone and internet activities provide more information for insurance businesses to develop new products and services. This is reflected in the report when the China insurtech market is analysed by technology. It is projected that the big data and machine learning segment will make the most significant revenue by 2031 at 9.82 trillion yuan (US$1.373 trillion), from 471.39 billion yuan (US$65.9 billion) in 2021. 

However, with blockchain technology increasingly adopted in the region by both the public and private sectors, the segment is anticipated to grow with the highest CAGR at 39.82 percent over the forecast period.

Breakthrough technologies used by insurtech 

The breakthrough technologies are used by insurtech to improve their customer acquisition, distribution, and management processes, leading to more accessible, efficient, and relevant services and products for their customers.   

China Banking and Insurance Regulatory Commission (CBIRC) data showed the country’s insurance market nearly quadrupled from 6.27 trillion yuan (about US$872 billion) in insurance capital in 2012 to 24.71 trillion yuan at the end of June 2022. It clocked in a 15.6 percent average annual growth rate. 

The commission said 21.85 trillion yuan of insurance capital helps finance the real economy in the long and medium term, with 33 asset management firms taking care of the insurance funds by the end of June this year. A decade ago, it numbered about 4 trillion yuan, and only 13 asset management firms were operating in the country.  

The Research Nester report listed security concerns, lack of skilled professionals in insurance companies, and regulatory restrictions as challenges facing China’s insurance industry. 

Regulations safeguarding rights

Its first national privacy law, the Personal Information Protection Law, came into effect in November last year. It safeguards privacy rights for individuals and sets up processing and cross-border data transfer guidelines for personal data akin to the EU’s GDPR (General Data Protection Regulation). 

Last year also saw the CBIRC introducing a new rule – the Notice on Carrying Out Special Rectification of Internet Insurance Disorders – to keep internet insurance in check. 

While it is worthwhile to note that the regulations are meant to protect consumers and prevent the insurance industry from taking on excessing risk, their announcements and implementations could come suddenly and could cause chaotic changes in the industry.

Yet with an insurance market set to surpass the US and become the largest in the world by 2029, there are plenty of opportunities to get a piece of the pie with digital solutions. 

Biggest insurance company in China

Ping An, the biggest insurance company in China, had 227 million customers last year and, as of July 2022, has a market capitalization of 844 billion yuan (US$118 billion). Property, transport freight, and liability insurance were part of its first products in 1988, and its range now includes life insurance, banking, wealth management services, and more. 

Peter Ma Mingzhe, chairman, and founder of Ping An, charted the firm’s growth by pioneering new technologies. Last year he wrote his thoughts on digitization on its 33rd anniversary:

“Digitization has raised to a new level humans’ ability to understand the world, grasp the underlying principles that govern it and make more intelligent decisions. For business, digitalization will bring about great disruptions in our ways of thinking and systemic changes in industries across a range of activities from strategy development to product and service delivery.’’

Driven by its digital-savvy population with an increased understanding of the importance of insurance following the pandemic, coupled with the industry’s adoption and advancement of digital tools and solutions, China’s insurtech market potential is vast and has the potential to go global as well.  

Featured image credit: Edited from Freepik here and here