Xiaoyusan, a Shenzhen-based company that manages networks of independent insurance agents on behalf of about 50 Chinese insurance companies, is adopting technology to transform itself into a technology company.
It plans to launch a next-generation version of its robo-advisory platform, Jing Jing, by the middle of this year. Today it provides customized products to agent networks, but it is now testing an open platform to let insurers sell their own products directly to end customers and settle claims. The company declined to name the insurers involved in the pilot.
Xiaoyusan – the name means “little umbrella” in English – was founded in 2015 as a distribution channel for insurers, with the first version of its technology to enable agents to customize products for end buyers.
Once the business gains scale, the company will look to go IPO, says founder and chairman Thomas Xu Han.
Its agents sell over 400 products, mostly in the health space. Its customers include the cream of China’s insurance industry, including China Life, China People’s Insurance Company, Ping An Group and PICC.
The company closed a Rmb100 million ($15.6 million) series B round of fundraising in March 2017, backed by MatrixPartners China and Tasly.
Xu spoke with DigFin about his plans. His remarks have been translated, and edited for purposes of clarity.
DigFin: Why did you found Xiaoyusan?
Thomas Xu Han: The original purpose was to provide more choice to the market, because there wasn’t enough to meet demand. But now that we have more than 400 customized products on our platform, the mission is changing. We want to be a leading platform in health insurance, which means we need more than offering products. We need to work on things like claims settlements and customer service.
What would that look like?
For example, if a customer is sick, even if we pay him money, he still needs to know where to visit a doctor, what kind of medicine to take, or where to find a therapist. We want to help them with these things.
Why did you want to develop Jing Jing?
Most of our team comes from Tencent, and 50% of our staff are technology people, not insurance people. We introduced Jing Jing’s chatbot to get basic information like a customer’s age and income. That lets us provide basic advice, as well as cut out manual costs.
How will version 2.0 be different?
It will provide better engagement with consumers, and better means of getting data. We will incorporate this into a risk-management system that our clients, the insurance companies, can use.
We see ourselves as a technology company, so we are going to open our platform to insurers, and let them sell their products and settle claims with consumers directly, in return for a subscription fee.
How do you increase customer data?
We will provide services like chronic disease management. This not only will give people a better customer journey, but generate user data for a variety of diseases. We can use that data to develop new and better products. We’re in talks now with orthopedic and cardiology hospitals. I hope they’ll share their data with us.
What’s the limitation of the existing version?
Jing Jing is not personal enough, so we often have to provide manual service on top, for which we charge customers Rmb68. Also, Jing Jing only provides pre-selected products that only work for a specific audience, mainly young people in the middle class, with annual income of Rmb200,000 to Rmb5 million.
As a result, consumers are going straight to the products on Jing Jing. Even if they consult the chatbot, we can’t say the platform itself is boosting sales.
How do you work with the insurance companies to customize products?
We have more than 6 million active customers, and we have data about them. Our company actuaries work with the insurers to develop products. The costs of this development vary a lot, from tens of thousands of renminbi, to millions, but we update them every month. We handle documents and claims too, just like an insurer would, but much more quickly. Last year we handled 20,000 claims.
Is using technology to customize products a trend now in China?
I’d like it to be, but I’m not sure it is.
As you become more of a technology company, do you see yourself as disrupting the traditional industry?
No. We’re just extending the supply chain. Maybe we’ll be disrupted by some other technology, like blockchain.
What kind of licensing do you have?
We have agent and assessor licenses. We will need an insurance license, but Xiaoyusan isn’t ready yet. If we are doing insurance ourselves on the platform, we’d have to also manage investing the money and the risks.
Right now we’re like a restaurant that makes a good steak: we’re not going to buy a cattle farm because we’re not good at raising cows.
Who do you see as your competition, especially once the new platform is in place?
Zhong An does really well as an online insurance platform. They are very good at selling products purely online, but they are more focused on property insurance.
What’s your revenue model?
Insurers pay a commission that depends on the product.
Are you profitable?
I can’t comment on that, but we don’t need more fundraising now. We’re waiting for the opportunity to go IPO, because we promised our investors we’d give them an exit.
Will you try to expand outside of China?
There are already platforms like ours in the U.S., like Oscar, or Bought By Many in the U.K. and Discovery in South Africa. When I was studying at Duke University, I thought we could import some of their ideas to China. Someday we might expand into One Belt One Road countries, but for now, China’s market is big enough.