This month we speak to Gracie Gan, who most recently served as Mapfre China’s Risk and Legal Director and is currently on sabbatical. Prior to her role at Mapfre, Gracie was program manager at Ernst & Young and project manager at eBao Tech. Gracie holds a bachelor of Law, East China University of Political Science and Law.
Q 1: This year saw some major changes at China’s insurance regulator, with new rules regarding life insurance products. How will this affect the development of online life insurance.
The most important or ‘revolutionary’ regulation for life insurance, as we known is ‘Rule no.143’ which is focusing on life insurance product design. However, I don’t hold the opinion that this new regulation will affect the online life insurance development of big industry players. Contrarily, SME life insurers in China will be affected by this new regulation as the regulator now is very serious on the products which will be submitted to CIRC for approval. Another impact for SME life insurers brought by No. 143 is the channel conflict. SME life insurers will need to adjust their channel focus from bank insurance, but this may also lead SME life insurers to start the development of the online channel. In summary, No. 143 is intended to regulate and standardize the product but not slow down the development of online life insurance. So even if there’s an adaptation period for market players, it won’t last long, and we shall not see a block of online life insurance development. The fact is, the core customer base of life-insurance in China will rapidly grow and life-insurance needs will continue to grow at least for the next 10 years. Such a big market need will surely call for a modern digital channel to fulfil its business requirement. So I’m confident that the overall online life insurance development trend is positive and shall not be impacted by this regulation.
2: The idea of the ‘insurance ecosystem’ is prevalent in China. Examples include the Ping An Good Doctor app, which combines Ping An insurance products with Ping An employed doctors. What, in your opinion, accounts for the willingness of Chinese insurers to move up stream and own the entire value chain rather than providing pure underwriting services?
I think that ‘insurance ecosystem’, as a way of insurance technology, is an inevitable character of the China insurance market. For example, according to the government issued Insurance Technology Innovation Report, we can see two scenarios of how technology will be involved into insurance operation. One is that the insurance industry is being encouraged to proactively develop insurance technology to master and cultivate customer resources. The other is that Chinese technology companies have the resources of customers, and insurance companies are relatively isolated from the market except the risks. Insurance products are embedded in other services or products. Thus, we can see that if an insurance company resists to build up or fit in an insurance ecosystem, we can foresee that it will face a series of situations like customers being isolated, and ultimately lower profits. I think the most interesting areas are A&H, motor insurance and agriculture insurance, considering the nature of them.
3: Which will have a bigger impact on the insurance industry, AI or blockchain?
To my understanding, it is not about who has the bigger impact but both AI and blockchain plays a part on the development of the insurance industry. AI helps to reduce insurance operation cost, minimise insurance fraud, and to calculate and appraise the insurance risk more accurately. While blockchain helps to rapidly validate the insured and the insurer so that it can be detached from an insurance company. I think both AI and blockchain has its restriction currently. AI has its argument on social ethics and lack of regulation. Blockchain still requires more technology development. But, I also think they will impact each other in a way. Like AI is using blockchain to store data, and blockchain will need AI to quickly develop its technology. Apply it to insurance it is the same. It is a challenge for the insurance industry on how to use both AI and blockchain to evolve insurance techniques.
4: It seems there are more property insurance startups and initiatives than on the life & health side. What do you think accounts for this?
Back in 2016 and before, even early 2017, it is true that there were more property insurance startups than on the life & health side. I think it accounts for the policy and regulation background as in the past few years, there were a lots of ‘good’ regulations promulgated, such as the deregulation of motor insurance, CROSS, etc. But, I am thinking this is a continuous trend, as I can see a huge market for life and A&H insurance, especially as the social insurance fund is not adequate to sustain the needs of medical purposes. Additionally, the regulator is encouraging more and more specialized insurer to come into the market.
5: Which areas of digital insurance do you find most attractive globally?
This is a good question but hard to answer by just identifying one area. So allow me to say that actually every area of digital insurance is attractive and is growing. But I can say that only these areas, which can fit in the ‘FinTech’ concept, can be attractive and can live in the industry and be accepted by the consumer. The future of digital insurance will be based on the creation of a business model which relies on new financial sector technologies. And then, the new business model shall serve as a new basic resource, to push for an iterative innovation of digital insurance. This is attractive to me.
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