Interview – Renzo Liu
This month we speak to Renzo Liu who serves as Strategy Project Manager at An Bang Insurance Group. Renzo has witnessed both the rise of Chinese insurtechs and the entry of Chinese internet companies into the industry. Renzo received his B.A from University of Minnesota and M.E from University of Virginia.
Q.1 In the face of increasing competition in the Chinese insurance industry, how can western insurers compete with Baidu, Alibaba, and Tencent (BAT)?
Unlike other industries in China, the insurance industry is heavily orientated towards local companies. In fact 95% of the market still belongs to Chinese companies. However, the CIRC has started to ease the restrictions on western insurers so as to stimulate competition and promote efficiencies. Additionally, the BAT (Baidu, Alibaba, Tencent) are amplifying the competition in a totally different way by not only investing in establishing new insurance companies, but also playing a role as InsurTech solution providers to support traditional insurer’s business transformation through a scenario based sales channel. Western insurers can collaborate with established internet companies by taking advantage of BAT’s mature technology and online platforms while utilizing the global resources of western insurers to provide more attractive and tailored insurance propositions for the Chinese. So, when considering the BAT, it’s important not to view the landscape as competing with them, but collaborating with them through combining global resources, mature technology, and advanced insurance expertise.
Q.2 Which will have a bigger impact on the insurance industry, blockchain or AI?
I see clearer use cases for AI, especially as it relates to customer service and claims management for simple products such as auto and travel insurance. Customer service and claims are a significant burden for insurers and the addition of AI enabled chatbots and claims processing will impact retention rates and profitability directly. For blockchain, there are still questions around security and the exact use cases for insurers. There are a lot of ideas, but we need some more time to identify the potential of blockchain.
Q.3 The notion of an ecosystem seems especially relevant in China (Ping An Good Doctor or China Life retirement homes for example). Why do you think we don’t see the ‘ecosystem’ phenomenon in the West?
I think there are two major reasons behind this phenomenon. From a commercial perspective side, Chinese companies believe “the bigger the better”. Big corporations can gain more social resources (government support, policy preference, etc) and also garner more public attention by establishing an ecosystem, this in turn promotes their social recognition and brand recognition. Concurrently through establishing an ‘ecosystem’, companies can expand their businesses into adjacent areas.
From the customer side, Chinese customers believes “too big too fail”. On one hand, government would back those giant ships up. Customers’ rights would be highly protected by the state, which gives them a strong sense of safety. On the other, ‘ecosystem’ really brings customers more consolidated services and better customer experiences.
Q.4 The CIRC is imposing strict regulations on the development of digital insurance in China. Do you think there is a risk that CIRC could stiffle innovation through too many rules and restrictions?
I don’t think so. Digital insurance is still a relatively new thing with many uncertainties. A cautious attitude is actually beneficial to the long-term development of digital insurance. Even though CIRC have enacted rules and restrictions, it doesn’t mean they want to limit its development. Both insurers and the regulatory committee need time to discuss and explore its most suitable development path and the appropriate business models. I believe the CIRC will open up the industry when the time is right.