Insurtech in China

Over the past decade, the digital economy in China has become a powerful growth engine for the country's economy as a whole. For the insurance industry, digital transformation – the integration of technologies throughout the value chain – has been a game changer. From organisational structures to business strategies, operations processes, product design and beyond, insurtech has redefined how insurers do business, and will play an increasingly important role in promoting sustainable sector growth in the future.

This report – a partnership publication between Swiss Re Institute and Fudan University – provides a quantitative analysis of developments in insurtech in China today. The research includes the creation of a China insurtech development index and sub-indices by different types of technology. These evaluate market attention on specific insurtech topics, based on the unstructured data obtained from media news.

China is riding high on a second insurtech wave in four years. To date, insurtech is mainly used to boost sales of insurance policies and automate underwriting claims. Big Data and artificial intelligence (AI) are also being widely applied. Big Data in particular will play a key role in product innovation and risk pricing.

The insurtech ecosystem in China consists of traditional and online insurers, internet and tech companies, and start-ups. All have different business strategies, and also have fundamentally different strengths and comparative advantages. This presents many growth opportunities. For example, tapping the digital capabilities and extensive user base of large internet companies can deliver exponential growth for insurers intent on designing innovative risk protection solutions tailored to specific consumer needs.

In the coming years, insurtech will further progress the transformation of China's insurance industry, by: 

• enhancing product design through more flexible, diverse and customised features, which will accelerate upgrades and innovation cycles across the industry;
• enabling the cross-industry insurance ecosystem to customise insurance products to meet specific customer needs; and
• deepening the integration of technologies across the insurance value chain, which will make business operations more efficient and lower the costs of providing insurance, while also improving the claims experience and reducing the risk of adverse selection. Technologies will also extend the boundaries of insurability boundary. The benefit can pass on to consumers in the form of lower premiums which, with enhanced underwriting capabilities, will increase insurance penetration and help narrow protection gaps in the long run. 

All told, there some obstacles that need to be overcome to ensure further progress of the sector. For example, the regulatory framework in China around data privacy, how insurers can use personal data and intelligence property needs to be further improved from the already-fast development in recent years. Other aspects include lack of a central strategic plan for inclusion of insurtech in the industry, limitations on data governance and low public awareness of data privacy.  

This report is available in Chinese only.