? Despite technological advances, in-person agents will remain vital for Chinese life insurers sales.
? At China Life, China's largest life insurer, plans are afoot to develop a business processing platform targeting efficiency and cost control.
Xu Hengping, vice president and COO.
Source: China Life Insurance Co. Ltd.
Xu Hengping, vice president and COO of China Life Insurance Co. Ltd., believes agent distribution will remain the most important sales channel for Chinese life insurers.
In the first half of 2017, China Life employed 1.58 million sales agents who accounted for 65.7% of the company's 345.97 billion Chinese yuan of gross written premium.
Nonetheless, as Xu explained to S&P Global Market Intelligence, technology has a vital role to play at the life insurance company, which is China's largest by total assets and gross written premium, with plans underway for a new platform aiming to transform sales and customer management, while lowering operating costs.
The following is an edited transcript of the conversation.
S&P Global Market Intelligence: Ant Financial, Tencent and other Chinese technology companies have entered the insurance industry. How does a traditional life insurance company like China Life approach challenges posed by these newcomers?
Xu Hengping: I think technology companies' insurance businesses complement insurance companies' products. [Tech companies'] products are designed for specific customers, such as shipping return insurance and flight delay insurance. Life insurance products are more complicated; customers may not fully understand a life insurance product just from information available online. There is still a need for face-to-face sales so the current agent channel continues to be mainstream.
Technology companies have a greater impact on the property and casualty market.
What types of products does China Life offer online?
China Life's online business mainly focuses on short-term insurance, such as travel insurance, for example. We sell long-term life insurance online as well, but the sales volume is very low. This suggests that customers looking for long-term life insurance are not gravitating toward online sales. There are also some regulatory constraints with regard to online sales.
With product innovation and a simpler purchasing process, people are becoming more aware of buying insurance online and regulations related to these policies are changing too. So in the future, online sales may play a bigger role in life insurance sales.
How is technology helping to change life insurance companies?
People are getting more used to online shopping. We need to adapt to the changes.
About 95% of [China Life's] transactions, including claims payments and policy loans, can be done online. We are building a new business processing platform to become more efficient and lower management costs. It is a comprehensive platform that manages product, clients and sales agents.
Client management for Chinese life insurers has changed from an insurance policy-focused approach to one focused on individual customers. Now we want to take a step further in managing clients at the family level. For example, by using big data analytics, we could be able to find out whether a customer's family members already have insurance policies.
What is China Life's approach to investing in technology?
Internal investment requests for technology always get approved. It is a cost-effective investment because if we don't develop technology by ourselves, we would, for example, have to pay billions of yuan to buy an underwriting evaluation system from foreign developers.
As of Dec. 19, US$1 was equivalent to 6.60 Chinese yuan.