Insurance brokers in China, which manage hordes of insurance agents on behalf of insurance companies, are building digital platforms to accommodate the shift in competition from traditional marketing to ‘Software as a Service’ business models.
In some cases, this is how companies struggling in the large but fiercely competitive domestic market think they can expand overseas.
“We have experience in marketing insurance products, and we hope to export our service with a SaaS model,” said Ouyang Kai, chief technology officer at Huize, a Shenzhen-based insurance broker with products from more than 80 insurers in their platform.
Right now the company offers comparisons on its site, but this year it will build a customer relationship-management (CRM) platform, where agents can manage their entire sales process, from pre-sale marketing to transactions and other post-sale services.
Similarly, Xiaoyusan, another insurance broker with a comparison tool, wants to offer risk management and claims management to insurers, charging a service fee as a complement to its current revenues. “We hope to use technology to remodel the industry,” said Xu Han, founder.
Insurance supermarket in China
China has many ‘insurance supermarkets’ that agents use to provide comparisons for customers. “But these websites are all about selling products,” said Pang Wenjun, CEO of Qibao Tech, a Shenzhen-based company that has already transformed into a SaaS business.
Comparison or supermarket sites have only limited utility, because customers must still go directly to the insurance companies if they want to settle claims. These insurers don’t know these customers, so they require people to go through another round of documentation to ascertain they own a given policy.
These businesses evolved this way before cloud computing became readily available, but now vendor databases can hold all party information, potentially eliminating these extra steps.
This is good news for insurance companies and for agents, both of which can simplify their processes and improve the customer experience. Insurers can also use these budding SaaS platforms to share data to improve risk management industry-wide.
We hope to use technology to remodel the industry
“A SaaS platform’s services let all parties communicate,” Pang told DigFin.
The platform requires data
It also heralds a shift among agents from selling products to selling a service, she says. But platforms only work if they have enough customer data, which can help insurers design better products and manage risk.
For example, if a customer is comparing flight-delay insurance on a broker’s comparison site, in China, this could serve as a red flag: normal behavior is to simply pick one and buy it, but multiple purchases could indicate a fraud, says Wei Dan, CEO of Baoxian.com, another Shenzhen-based insurance broker that is building a SaaS-type platform.
“If all insurers just stick to their own data, it would be difficult for them to properly measure the risks,” she said. “Some insurers are even buying customer data.”
If insurers stick to their own data, it's difficult to measure risks
As more brokers move to SaaS offerings, they hope to regain pricing power or be able to differentiate themselves, either by tweaking commissions or service fees, says Qibao’s Pang.
And just as Huize is looking to use the technology to break into markets beyond mainland China, Qibao is also looking at Hong Kong. Although Hong Kong has its own comparison providers, including those looking to expand into financial advice and execution, Pang says Chinese firms may have an advantage if they act now: “Mainland brokers develop fast, and the market here accepts fintech.”