Alibaba-backed
China's insurtech sector is seeing high growth even as insurance uptake is relatively low: about 60% of ZhongAn's customers are of ages between 20 and 25. In fact, the IPO is the world's first insurtech public offering. Such companies use technologies such as artificial intelligence and blockchain to make insurance products simple and easy to access for customers. Some of the most popular products include "shipping return" because so many people in China have transitioned to online shopping sites such as Alibaba's platform, Taobao.
Additionally, when the company launched in 2014, it sold "binge drinking" insurance, which was essentially for football fans who watched the World Cup and needed medical attention as a result of heavy consumption of alcohol. According to Richard Hatherall, a partner at Bain & Co in Hong Kong, because of ZhongAn's incredible backers (Any Financial, Tencent and Ping An Insurance), "It has advantage access to customers where other insurtech doesn't. It actually has many of the characteristics of big tech."
Last year, ZhongAn boasted that it had sold an impressive 5.8 billion policies to 460 million customers in just a three-year period, a record that is even high for traditional insurance companies. As part of their business model, ZhongAn sells high volumes of online-only insurance by forging partnerships with some of China's largest internet groups. However, ZhongAn predicts that it will have some losses this year. From January to March, the company posted a net loss of $31 million (Rbm 202 million). According to Dayton Wang, an analyst at Hua Tai Securities in Hong Kong, one of the biggest risks of this industry is "the uniqueness in the market. If ZhongAn's two biggest shareholders want to do the same business, they can easily come into the market."
Comparable insurtech ventures have also emerged in the U.S. Goji, a car insurance company, allows users to find the best rates and policies by inputting information about their vehicles. The company recently got a $18 million investment from Brookline Venture Partners and Charles River Ventures. Another mobile-only insurer, Trov provides on-demand property insurance. It allows users to insure a specific object for a specific length of time. For instance, a traveling student can insure his guitar before a road trip. Start-ups such as these have already begun shaking up the insurance sector and it is only a matter of time before insurance makes a complete transition to online-only platforms.
