Future directions for foreign insurance companies in China – EY
Article Synopsis :
China represents a great opportunity for foreign insurers yet the majority struggle to make inroads in a market that is complex and often challenging to operate in.
In the detailed report titled “Future directions for foreign insurance companies in China”, EY examine the barriers to successful growth for foreign insurance players in China. They also look at the trends shaping the market today and tomorrow in order to help insurers refine their growth strategies. The reality is foreign-owned life insurers represented just 5.6% market share at the end of 2013; In property and casualty, it was even less at 1.3% – a figure that has remained flat since 2005.
The report is extremely comprehensive and covers a lot of ground, including topics such as regulation, performance and growth, product developments and HR developments. It also includes a section on Digital Marketing and we have focused our review on this section.
In the ‘Digital Marketing’ section on page 34, the EY team assess the current state of digitisation in China’s insurance sector and identify ways in which foreign players can leverage and benefit from these developments. The report lists three key barriers that are leading to the slow adoption of digital marketing by foreign companies:
- Legacy IT systems
- A lack of investment in new technology
- Regulatory constraints
The report also highlights how foreign insurers are increasingly harnessing social media tools in a variety of ways to penetrate the local market. These include:
- Brand building
- Interaction with property and casualty customers to process claims, upload photos and video
- Customer service
- Employee communications and engagement, including the promotion of corporate culture
- Product information
- Promotional campaigns
- Training agents
- Agents use social media to communicate with clients and to report on client interactions
- Growing customer loyalty
Finally, the report showcases a case study on online marketing at CIGNA and CMB Life who operate two online sales models – one selling directly online, and a second deploying an internet and telephone combination.
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Digital Insurer's CommentsIt is widely acknowledged that technology advancement has disrupted the market landscape and new digital-driven business models have emerged across the globe and the Chinese market is no exception. Demographic developments and rapid technology adoption such as smart phones, internet and social media have helped create a level playing field for all insurers in China. There is a huge opportunity for foreign insurers and through the smart use of digital technology they can potentially fend off local rivals. But the real challenge for foreign insurers lies in leveraging their global strengths yet ensuring there is sufficient local customisation to take into account the needs and wants of Chinese consumers – it’s a double edged sword and tricky to get right but those that do will be the ones that succeed.
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