Insurance: New regulations expected to improve performance
Category strong despite slower economy and volatile stock market
The insurance category increased a modest 4 percent, following a 21 percent increase a year ago, as the economy slowed, stock market volatility hurt profits, and the government continued efforts to restrain investments it deemed too risky.
All but one of the five insurance brands ranked in the BrandZ™ China Top 100 declined in value. Still, because of growing consumer acceptance of insurance products, premium income increased for four of the largest insurance brands: China Life, CPIC, PICC, and New China Life.
Ping An, a diversified financial services brand, rose 21 percent. The positive result resulted from an increase in the number of retail customers, reflecting the success of Ping An’s strategic shift from corporate to retail business. Two of Ping An’s start-ups also performed well: Lufax, an online lending platform, and the healthcare platform Ping An Good Doctor.
Insurance brands were expected to benefit from regulatory reforms aimed at strengthening the stock market. The changes enable insurance companies to invest a larger proportion of their assets in equities.
Meanwhile, China’s insurance market was about to become even more competitive with the expansion of foreign brands following the liberalization of regulations. The government approved the market entrance of Germany’s Allianz Group, as the first foreign insurer to enter China without a Chinese partner. And France-based AXA said it would purchase the remaining stake in its Chinese partner, AXA Tianping.
In addition, the consumer need for healthcare coverage, and the determination of major Fintech players to meet that need, has caught the attention of government insurance regulators and tested the very definition of insurance. Alibaba’s Ant Financial, and Shuidi Huzhu, a Tencent product, share risk across groups of online members. The fintechs have called these offerings mutual protection products, to comply with government assertions that these offerings to not meet the regulatory guidelines.