Chinese search giant Baidu forms new online car insurance business
Internet search titan Baidu is poised to ratchet up its expansion in China’s nascent online insurance market through a new alliance with China Pacific Property Insurance.
The two companies on Tuesday announced the establishment of an online car insurance company that will extensively use “big data” resources in its operations.
“The company will explore new models for auto insurance products design, risk control and operations,” Baidu president Zhang Yaqin said in a statement.
Zhang suggested that the partnership with Shanghai-based China Pacific Property Insurance, a subsidiary of Hong Kong-listed China Pacific Insurance (Group), would set “a valuable benchmark” for the online insurance market in China.
In the high-technology sector, big data refers to extremely large or complex sets of information that can be analysed with computers to spot patterns, trend and associations.
Baidu expected to contribute its abilities in the fields of big data modelling, machine learning and deep learning to the new company.
China Pacific Property Insurance, one of the country’s top three car insurance services providers, has committed to provide its actuarial pricing capability and offline service network resources in the new company.
“We look forward to the successful integration of technology and traditional insurance business through this cooperation,” China Pacific Property Insurance chairman and president Gu Yue said.
Their new enterprise is subject to approval by the China Insurance Regulatory Commission.
Data from the commission showed that vehicle insurance premiums in China totalled 620 billion yuan last year.
Baidu’s new venture followed the Nasdaq-traded internet company’s deal with Bitauto Holdings on Monday.
Baidu, Tencent Holdings and JD.com agreed to each invest US$50 million in New York-listed Bitauto, which is a leading provider of online content and marketing services for the mainland’s car industry.
The three Chinese internet giants committed to each buy 2,471,577 new stock from Bitauto at US$20.23 a share.
“With the car sector being one of its strategically important vertical [industries], Baidu will be able to gain access to deeper content from Bitauto,” Jefferies equity analyst Karen Chan said in a report. “Bitauto, in return, can leverage Baidu’s search, big data and transaction service platform.”
Baidu, one of the largest internet companies in the world, has a vast user base and data analytics capabilities. It has more than 660 million monthly active users of mobile search and 14 apps with more than 100 million daily active users each.
The Beijing-based firm also counts more than 100 million car owners who use its Baidu Maps program.
It first entered the mainland online insurance market in November through a joint venture called Bai An, with global insurer Allianz and Asian investor Hillhouse Capital Group.
Bai An was set up to meet the domestic demand for “more diversified, customer and scenario-based insurance products”, Baidu chairman and chief executive Robin Li Yanhong said at the time.
Scenario-based insurance consists of small, situational insurance protection offered for high-frequency, location-based internet transactions, including online travel and various online-to-offline local services.
Gartner analyst Sandy Shen pointed out that life insurance still relied heavily on sales agents, but digital insurance for travel, car and property coverage can all be conveniently transacted online.