With China's online insurance sales set to hit $145B by 2021, Ant Financial, Tencent, and other leading internet giants want in on the prize.
China’s internet giants, including Ant Financial and Tencent, are making their ambitions clear that they are out to win the country’s online insurance industry.
Over the last several years, China’s three leading tech conglomerates – Baidu, Alibaba, and Tencent, or BAT – as well as their affiliates, have made a number of joint ventures, investments, and acquisitions meant to strategically expand their footprint in the insurance industry.
Why does this matter?
Because China’s online insurance sales are set to see massive growth over the next five years and beyond. In 2016, the amount of life and non-life insurance products sold through online or mobile channels in China totaled just over $45B. By 2021, the figure is expected to hit $145B, according to Oliver Wyman.
To illustrate the different ways China’s largest internet giants are positioning themselves in the online insurance market, we put together the graphic below breaking down BAT’s various partnerships, investments, and acquisitions in the space.
Strategic moves by BAT in insurance differ across life, health, and P&C: Ant Financial is the only one of the three to acquire a majority stake in an insurance carrier after it took a 60% stake in licensed P&C insurer Cathay Insurance China in 2015.
Of the three, Tencent has been the most active in expanding its strategic positioning in insurance recently: In August, Tencent formed a partnership with Fubon Financial to sell Fubon’s P&C insurance policies through its WeChat messaging platform. This became closer to reality after Tencent’s online insurance agency WeMin Insurance Agency, was approved by China’s insurance regulator in October.
Both Cathay and WeMin are larger stakes than either Tencent or Alibaba/Ant Financial have in Zhong An Insurance, China’s first online-only insurer. Launched in 2013, Zhong An recently raised $1.5B in an IPO on the Hong Kong Stock Exchange and planned to expand into life insurance as well as other healthcare products.
Regulatory approval has been one of the biggest challenges for internet giants moving into the insurance industry. For example, a joint venture between Baidu, Allianz, and Hillhouse Capital announced in November 2015 has yet to launch, nor has a joint venture announced in August 2017 between Tencent, Aviva, and Hillhouse Capital.
Outside of the strategic moves noted above, it’s also worth noting that Ant Financial operates an open platform hosting close to 80 insurance companies and also shares data with 18 insurers for use cases such as car insurance scoring.
Here’s a full rundown of BAT’s strategic moves in the insurance industry:
| Firm | Date | Type | Partner/Name | Description |
|---|---|---|---|---|
| Baidu | Nov-15 | Joint Venture | Hillhouse Capital, Allianz | In November 2015, Baidu teamed up with Allianz and Hillhouse Capital to launch a new online-only insurer in travel, short-term health, lifestyle, and auto. The initiative has yet to receive regulatory approval or launch |
| Baidu | Jun-16 | Joint Venture | China Pacific Insurance Co. | The joint venture aimed to set up a new online car insurance company. |
| Alibaba Health | Apr-16 | Partnership | China Taiping | Alibaba Health announced a joint venture focused on online health insurance operations. |
| Alibaba | Nov-13 | Founding Investor | Zhong An Insurance | In 2013, Alibaba became a founding shareholder of Zhong An Insurance, China’s first online-only insurer. Zhong An’s first product was a shipping returns insurance for Alibaba’s Taobao marketplace. |
| Alibaba | Jul-17 | Investment | CompareAsia Group | Alibaba became an investor in the insurance comparison marketplace in a $50M Series B round in July 2017. |
| Ant Financial | Aug-17 | Investment | MassMutual Asia | Ant took a 5% stake in MassMutual Asia in August 2017. The two will reportedly “work together to explore future business opportunities.” |
| Ant Financial | Sep-15 | Majority Stake | Cathay Century Insurance | Ant took a 60% stake in Cathay Insurance China to colllaborate on online insurance products. |
| Ant Financial | Sep-17 | Joint Venture | China United Insurance Holdings | The joint venture received regulatory approval to provide agriculture insurance to Chinese agricultural companies while utilizing Ant and Alibaba’s technology and logistics resources. |
| Ant Financial | Jan-17 | Partnership | China Taikang | The partnership provides a certain amount of free health insurance to Alipay users every time they make an offline payment with their Alipay wallet. |
| Tencent | Jan-17 | Joint Venture | Hillhouse Capital, Aviva | Tencent, Aviva, and Hillhouse Capital announced they would team up to develop a new digital life insurance entity in Hong Kong. |
| Tencent | Jul-17 | Joint Venture | Fubon Financial | Tencent partnered with Taiwan’s Fubon Financial to sell Fubon’s insurance products on Tencent’s WeChat platform. |
| Tencent | Oct-17 | Controlling stake | WeMin Insurance Agency | Tencent’s online insurance agency received regulatory approval to sell insurance products through its apps WeChat and QQ. |
| Tencent | Nov-16 | Joint Venture | HeTai | Tencent became one of 8 investors to back a new online life insurer, which received regulatory approval in July 2016. |
| Tencent | Nov-13 | Founding Investor | Zhong An Insurance | In 2013, Tencent became a founding shareholder of Zhong An Insurance, along with Alibaba and Ping An Insurance. |
| Tencent | May-16 | Investment | Shuidihuzhu | Tencent is an investor in the startup, which operates a crowdfunding platform, a “mutual aid” platform for critical illness, and a health insurance sales platform. |