Blue launched a year ago with a simple front end, some simple protection products for critical illness, and a lot of hype. Although it trades on the traditional life-insurance license of shareholder Aviva, Blue launched as a digital-only business, at least on the distribution end.
(Read here about Bowtie, the city’s first digital-only licensed life insurer.)
Expectations for a new company backed by Tencent, Aviva and Hillhouse Capital ran high in the fintech industry. The backing of Tencent, in particular, had traditional insurers nervous.
They relaxed after Blue launched. Executives at several firms have told DigFin the first iteration of Blue was a little underwhelming. The claims process, for example, involves printing out forms – hardly an insurtech triumph.
Moreover, people in traditional industry look at traditional metrics. By that light, Blue hasn’t moved the dial. In 2018, Aviva (the license under which Blue operates) sold 1,375 annual-payment non-investment life policies, with a total premium of HK$1.3 million ($167,000), according to the Hong Kong Insurance Authority.
The likes of AIA, Prudential and HSBC Life sold upwards of 385,000 policies each and generated payments of over HK$16 billion ($2 billion) each – plus more in monthly-premium sales (another HK$15 billion in AIA’s case).
But that was a year ago. Blue is beginning to broaden its product set, improve its financial operations, and most importantly, embrace more technology. In short, it continues to leverage its three shareholders to forge a new kind of competitive insurance business.
Charles Hung, Blue’s CEO – a former head of risk at Aviva – acknowledges that the company’s traditional stats are nothing to brag about. The company doesn’t represent a threat in terms of policies sold, manpower (it doesn’t run an agency force), or APE (annual premium equivalent, the formula to compare insurers’ various types of premiums sold).
“We follow impressions, site visits, traffic volume, and customer engagement,” Hung said. “Brand recognition is important.”
On this front, the chief exec is happy to share statistics. “We’ve had 300 million impressions, 1 million site visits, and three to four million engagements via social media,” he said. That’s netted about 80,000 new accounts and the thousand-plus policy sales.
Moreover the company’s offering focuses on protection, whereas many traditional metrics rely on investment-linked business.
“The 7 million people in Hong Kong – that’s our benchmark.” Hung said, referring back to marketing and awareness.
What about the fundamentals of the business’s set up, though? For example, the heavy paperwork for the claims process? This is something traditional players already automate better. Is Blue using this as just a way of pushing KYC to the end of the product cycle?
Hung disputes that characterization. “Most KYC is on the front end, using facial recognition and OCR [optical character recognition]. But certain criteria require a manual query,” he said.
He says the firm has been constantly working on the front end.
Over the past year it’s made 150 changes based on how customers interact with the site and mobile app: things like placing the icon, the color scheme, fonts, the wording. This is the sort of granular iteration that tech companies use to build a better mousetrap.
You’re going to see more in the way of A.I. and chatbotsCharles Hung, Blue
The company has also launched a claims service that gives customers information about their submission, in case they are missing information, and to update them on the payment’s status.
But bigger, if less visible, changes are in store.
Leveraging the shareholders
First, Blue is about to launch its first non-protection product. Citing regulatory concerns, Hung declined to specify the type of product, or confirm whether it’s taking Blue towards the kind of savings or investment-linked policies that would put it in head-to-head competition with the big incumbents.
Second, it is in discussion with Hillhouse about internal asset management. All insurers need to invest the premiums they receive, a task made difficult in today’s environment of low interest rates. Hung declined to comment further on this, but it suggests the business is reaching the point where it needs to think more strategically about financial operations.
Third, it has obtained regulatory approval to move its tech stack and data to Tencent’s cloud.
“That will improve our turnaround and let us react quickly,” Hung said. “Within the next few weeks, we will be on a new platform for our back end. Meanwhile, incumbents are stuck with old legacy systems with high operating costs.”
We need to be part of a consumer’s lifeCharles Hung, Blue
By shifting to a cloud-based tech stack, Hung says the insurer will be able to roll out more innovations quickly. “You’re going to see more in the way of A.I. and chatbots,” he said.
For example, the insurer has been experimenting with personalization. It’s done so using IBM Watson’s deep-learning tools behind a game it launched on WeChat (the messaging and gaming platform of Tencent). The game has nothing to do with insurance, but it’s a way to learn how to personalize responses to customer inputs.
The company is also starting to learn how to use data.
Data and partnerships
For example, Hung says the most surprising takeaway is that the majority of its customers are male. Traditionally protection products are mostly sold to females. Then there are other patterns emerging, such as enquiries from elderly people, or more business during mornings than afternoons.
“We need to turn this information into opportunities,” Hung said.
What about that WeChat relationship? Blue has a business account on the platform – but so does everybody else. Is it getting any special treatment? Can its parentage give it an edge?
So far, the answer is no, although Hung says he’s still looking at possibilities. Blue is constrained because it isn’t licensed to sell policies to people outside of Hong Kong.
“I can’t say what we’ll do,” Hung said, “but there will be stronger integration – like our use of facial recognition technology or cloud, which are Tencent technologies.”
He is also looking at broadening Blue’s reach via partnerships, including with virtual banks. Tencent holds a stake in on Hong Kong licensed VB, called Fusion Bank, along with ICBC. Is that going to be a home for Blue?
“It’s still early days for the virtual banks,” Hung said. “We’re interested but it’s too soon.”
But he’s working on the broader question of an ecosystem.
“Insurance is traditionally sold, not bought,” Hung said. “To change that we need to be part of a consumer’s life, integrated into what they do on a daily basis. The normal way would be to tie up with medical associations or pharmacies. But there’s also lifestyle ways to leverage customers. The sky’s the limit.”