Ping An Insurance to maintain US$1b annual investment in internet

China’s second largest insurer to invest more in internet finance, health care, real estate and cars to meet customers’ personal finance and lifestyle needs

PUBLISHED : Wednesday, 05 April, 2017, 5:11pm
UPDATED : Wednesday, 05 April, 2017, 11:04pm

Ping An Insurance, the nation’s second largest insurer in terms of premiums, will continue investing about US$1 billion per year on internet development as the company expands its fintech and health care businesses to diversify its income, according to Jessica Tan, chief operating officer of the group.

“Internet platforms such as Lufax need a lot of upfront investment. But after investing in the fixed cost and when the business volume increases, we will see margins improve significantly,” Tan said in an interview with the South China Morning Post.

“Over the past five years we have spent about 1 per cent of our revenue every year to invest in new technology, which equals about US$1 billion every year. We will continue the investment in coming years as we want our fintech and health care businesses to be equally as important as our core insurance business in the long term.”

The group, headed by founder and chairman Peter Ma Mingzhe, started in the insurance business in 1988 and has grown to a current sales team of 1.1 million agents.

Over the past decade the group expanded into online activities with its internet lending and wealth management financial platform Lufax, and also diversified into internet sales of financial products, health care, real estate and cars.

Ping An sees internet business as key to future growth

The diversified model has helped boost income, with the group reporting a better-than-expected 15 per cent rise in net profit in 2016 on sales of more insurance policies and a one-off gain from restructuring.

Tan said 22 per cent of new customers came via the internet while cross selling among different business lines brought in more business. The Ping An group now has 346 million internet users on its many internet platforms that provide information and products in the areas of finance, insurance, health care, real estate and cars.

“When you have more products it helps you retain customers who stay with you for a longer time,” she said.

Tan said the group’s internet platforms in the past mainly provided information or sold Ping An products to customers.

As the next step in its technology expansion, the company recently started offering third party internet services to help banks and health clinics set up their own internet platforms to service customers.

In one example, Ping An is helping the Bank of Shanghai launch mobile apps to service its clients. It is also assisting a number of banks in establishing internet platforms to facilitate loans for small and medium sized corporate customers.

Tan said Ping An Bank has a loan book of 1.5 trillion yuan (US$220 billion) whereas the total size of the SME loan market on the mainland is 65 trillion yuan. If Ping An can help other banks launch platforms to serve just 10 per cent of these customers, it would be a business three times bigger than Ping An Bank’s.

Ping An’s profit up 15pc in 2016 from one-off gain, more insurance sales

“We have invested in all these technologies to establish platforms for our core business for Ping An. We are also able to use the technology to help other financial firms set up their platforms and Ping An receives a fee for that service. That is a another way to diversify our business,” she said.

In a similar fashion, the company can also help health clinics establish their internet platforms to manage their patients.

In future, Tan expects the group will expand into online real estate and car sales. Ping An Insurance has already purchased some websites that publish car and real estate pricing and product information and it plans to link up with manufacturers and developers to ensure better deals for customers.

“Homes and cars are an important part of personal life. Ping An aims to be a company that can service personal need in insurance, health care, financial services as well as their home and car,” she said.

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