Medical insurance coverage typically turns into invalid if the client is drunk. However in the course of the soccer World Cup in 2014, Shanghai-based mostly Zhongan Insurance coverage turned that rule the wrong way up by providing provided Chinese language soccer followers a coverage particularly for self-inflicted liver injury.
It value lower than $1 and coated sports activities fanatics towards alcohol poisoning for 30 days — paying out as much as Rmb2,000 ($290) for hospital charges. It quickly got here to be generally known as “watching-soccer-consuming-too-a lot” insurance coverage.
This has not been Zhongan’s solely foray into extra specialist areas of China’s insurance coverage market. One other of its insurance policies, referred to as “excessive warmth”, reimburses clients when the temperature hits 37°C. One other insures towards flight delays — and, in lots of instances, pays out whereas the client continues to be ready within the departure lounge.
However whereas such merchandise might sound area of interest, the corporate behind them is something however. From a standing begin three years in the past, it has bought 5.8bn insurance policies to 460m clients. This has shortly translated into revenue. Zhongan went from making a loss in 2013 to posting Rmb168m in internet revenue two years later. Complete belongings jumped greater than 500 per cent between 2014 and 2015, to Rmb8bn.
Wayne Xu, chief working officer, doesn’t dispute the usually mild-hearted nature of a few of its merchandise — admitting that some are merely designed to “make individuals really feel higher”.
The flight-delay insurance coverage product provides clients digital coupons on their smartphones that they will redeem whereas nonetheless within the airport. “It provides them a cause to stroll round whereas they wait for his or her flight,” Mr Xu explains. He sees this as a radical strategy in an business that has lengthy struggled to draw younger individuals.
However his huge three backers see critical scope for worthwhile knowledge gathering.
All three buyers have already collected consumer knowledge throughout huge swaths of China’s web, by way of on-line retailers, messaging purposes and financial institution accounts. Now, when Zhongan underwrites its retail credit score insurance coverage merchandise, it may well faucet into the private credit score scoring databases of the three Chinese language web teams — giving it one the broadest views of credit score knowledge of any firm within the nation.
To proceed the push, Zhongan has prioritised recruiting employees with tech, somewhat than insurance coverage, backgrounds. “None of us have been working at an insurance coverage firm earlier than this,” notes Mr Xu, who previously was a product supervisor at Google.
Henri Arslanian, an adjunct affiliate professor on the College of Hong Kong who teaches monetary know-how, says he regards Zhongan as “a know-how firm that occurs to give attention to insurance coverage, fairly than an insurance coverage agency that’s taking a look at digital as merely one other distribution channel”.
Alibaba has acted because the channel by means of which nearly all of Zhongan’s merchandise have been bought, and the insurer’s flagship coverage is return delivery insurance coverage for items bought on Taobao — Alibaba’s on-line buying platform. Zhongan’s insurance policies reimburse the price of delivery when a client returns a product.
Final yr, on the Chinese language purchasing vacation often known as Singles Day, which falls on November eleven, the group bought greater than 100m return delivery insurance policies in a single day.
Zhongan is discovering it has competitors out there for offbeat insurance coverage insurance policies. TongJuBao already sells specialist insurance policies to cowl for the price of divorce legal professionals, and for search groups to search for lacking youngsters. It additionally sells insurance coverage that gives revenue safety for individuals who depart their jobs to maneuver to a special metropolis.
Launching offbeat insurance policies doesn’t all the time go easily. Zhongan discontinued its product for heavy consuming soccer followers for an undisclosed cause, and China’s insurance coverage regulator has since issued warnings about corporations promoting “unique” insurance coverage.
Some analysts additionally query the lengthy-time period viability of Zhongan’s different insurance policies. It has a number of hundred low-value area of interest merchandise, from drone insurance coverage to insurance policies that cowl cracked cell phone screens and price just a few renminbi. On these, buyer uptake is more likely to be sluggish, the analysts declare.
“We hear that they’ve many groups creating many various sorts of merchandise however the quantity on particular person merchandise continues to be very low,” says Li Jian, a Hong Kong-based mostly insurance coverage analyst at Autonomous Analysis. “In case you don’t have scale, the prices will go up.”
A pure on-line insurance coverage operation additionally has its limits. Motor insurance coverage is among the quickest rising classes of property and casualty insurance coverage in China as we speak. However the enterprise requires insurers to have massive claims groups that may go to accident websites.
Missing these capabilities, Zhongan has as an alternative targeted virtually completely on area of interest motoring insurance policies, overlaying tyres and different particular person elements — lacking out on masking greater-ticket gadgets, says Stella Ng, a Hong Kong-based mostly analyst at Moody’s.
“Given an working historical past of three years, with restricted monitor report of excellent underwriting profitability, we nonetheless consider it stays to be examined over time,” Ms Ng warns.
Further reporting by Ma Nan