Tencent used an insurance industry event to tell the traditional industry it is open to collaboration – with insurers, but not with agents, for which it sees no role.
“Traditional insurance companies don’t have enough concern about their customers,” said Bruce Xie, general manager at WeSure, speaking today at All-Gen Group's Internet Insurance Summit in Shanghai. “The internet industry is riskier. So these industries need each other...We don’t want a war in the industry.”
But his mollifying remarks didn’t extend to insurance agents. “Unless intermediaries create value benefiting everyone in the chain [the lifecycle of a policy], they should be removed.”
He says intermediaries make too much money because they have more information than the customer. “With or without the internet, the industry needs to remove these, or it won’t develop in a sustainable way,” he said.
War and peace
WeSure launched its first product in collaboration with Taikang Insurance, Xie told DigFin. WeSure acknowledges the need to work with traditional players, which bring risk management and product expertise, while WeSure focuses on U.X. “We’re all about customer, customer, customer,” he said.
But there is rising friction between traditional insurers and internet companies. The traditional business, which has been around for decades in China and centuries in the West, bases product and pricing around macro paramters such as mortality rates. The internet economy bases products on user behavior.
“Our team comes from a different background,” Xie says, “and we want to leverage the advantages of traditional insurance.”
This gesture comes at a time when internet finance in China has made serious inroads into insurance, from traditional business lines such as automotive accident to new markets such as flight delays.
Now Tencent, the company behind WeChat, the messaging platform that claims 800 million users, has launched WeSure to a select audience – about 50 million people, Xie says. Business commenced in November.
He tells DigFin the plan is to make it available to the entire WeChat user base by the end of the year. The company is in talks with several insurance companies to support its rollout of additional products, beginning in health. Given the company’s reliance on the WeChat platform, it cannot expand overseas except in cases where people are using the messaging app.
Xie says the company spent about a year trying to understand how to link China’s demographic profile – one of extended longevity and low birth rates – to insurance. Although the overall population is aging, there are millions of people with newfound wealth who are now aware of health and wellness, and they are driving China’s insurance industry growth.
Tencent, a backer of Hong Kong-listed Zhong An Online P&C Insurance, also sells property and casualty policies from Taiwan-based Fubon Financial on WeChat, while its online insurance agency, WeMin, recently gained a license. Xie, who is from Taiwan, joined the company from Fubon.
Xie says WeSure built its business on three principles: security, connectivity and data. Security is about digital identity. He says in the online marketplace for lending in China, some 80% of defaults are due to fraud or mistaken identities.
WeChat wanted to rely on users that it can identify via personal information like names and phone numbers to a bank account. In addition to cybersecurity, WeChat has a small army of people who work with banks and the government to confirm digital I.D.s. As WeChat confirms more of its userbase this way, it will open WeSure to them.
Another factor in extending WeSure is targeting users based on their social networks, or what Xie calls connectivity. For example, it wants to offer one policy to cover core family members, versus another policy for distant relatives. This is possible, Xie says, because “We’re all using WeChat now.”
A second aspect to connectivity is WeChat’s relationships with businesses and government. The government runs various services through WeChat, such as social insurance collections and payments, or enabling drivers to pay traffic fines.
In this manner, WeSure has connections with 36,000 hospitals and is looking to enable them to launch their own official accounts on WeChat, through which patients can pay for stays and claim their deductibles at the same time.
The third piece of the puzzle is data. Xie says WeChat doesn’t want to undermine trust by misusing users’ personal information or private conversations. But it does use public information such as how long a user stays active on WeChat, to create portraits that can be shared with insurance companies for pricing products or servicing claims.