Digitalization seems to be an inevitable trend in China's insurance industry.
Nanyan Insurtech (南燕保险科技) has recently announced the completion of its Series B2 round of financing, led by BOC International (BOCI, 中银国际), landing over a hundred million yuan.
Previously, Nanyan Insurtech closed three round of funding: a USD 15 million Series B+ round in November 2018 led by Starr Companies – global leading insurance and financial services organization; a tens of millions of dollars Series B round of financing led by Savannah Industries Global Capital Group (SIG) in December 2017; and a Series A led by Bluerun Ventures (蓝驰创投) in 2016.
Several of the existing investors listed above also took part in this fresh round of funding of the company.
By leveraging the capabilities of the insurtech firm in AI and big data, it provides both cost, service efficient, and risk control solutions – including product, sales, management and claims – for insurance companies, reinsurers and intermediaries.
Its SaaS service mainly is mainly composed of three modules: Enterprise resource planning (ERP), Customer relationship management (CRM), and sales platforms. Specifically, the product has 450 major Standard Product Units (SPUs) and more than 4,000 Stock Keeping Units (SKUs), where clients can subscribe to each accordingly based on their own needs.
Gong Xun (龚勋)–Founder and CEO of Nanyan Insurtech–explained the rationale for his judgment that the model of 'Internet + Insurance' is going to become an inevitable trend in the domestic market, during an interview with 36Kr.
Taking risk management as an example, Mr. Gong noted that there are two major pain points in China's incumbent industry:
Firstly, there is an asymmetry between what customers demand and what insurance companies supply, which results in difficulties and redundancies in making transactions;
Secondly, the entire business process is considerably long and lacks efficiencies. If any steps go wrong, it will result in either that the customer's risk cannot be effectively resolved or the risk of the insurer cannot be controlled.
Insurtech firms like Nanyan Insurtech, could help insurers in managing their risks by leveraging new technologies:
1. Big data serves as the fundamental basis of risk control. Through relevant mining technologies, it is possible to categorize the characteristics of customers – such as their occupation, region, and age. This makes it easier for Nanyan Insurtech to confirm the risks that a particular project involves.
2. Control the classic issues of adverse selection and moral hazard through sales data analytics technology.
3. Helps insurers in improving their underwriting capabilities and controls retention risks through product pricing technologies.
According to Mr. Gong, the business has maintained a 100% level year-on-year growth rate in recent years. It has served more than 1,000 clients which are mainly based in the first- and second-tier cities, encompassing more than 110 insurance companies – 10 of which have implemented cloud-based underwriting systems – hundreds of professional intermediaries and more than 500 agencies. The repurchase rate of clients at present is at a 95% level.
The business of the insurtech solution provider has grown rapidly in second-tier cities; the monthly sales of policies there have exceeded more than 200,000 through its SaaS platform.
As for the team, there are currently approximately 200 employees working in Nanyan Insurtech. Before founding the company, Mr. Gong worked as CFO of Royal & Sun Alliance Insurance – a subsidiary of RSA Insurance Group (RSA: LON).
The core members of the team also encompass former employees of international insurance and Internet juggernauts – like American International Group (AIG: NYSE), Ping An Insurance (中国平安, 02318: HK), AIA Group (01299: HK) and Oracle (ORCL: NYSE), to name a few.
Moreover, with the completion of Nanyan Insurtech's new round of financing, the company has also announced its acquisition of Mediliml – a Malaysia-based health insurance third-party administrator (TPA) service provider.
According to Mr. Gong, through the 15 years since the foundation of Medilink, it has established a comprehensive medical service network in both China and overseas market through its 'ECCS (Early Childhood Comprehensive Systems) + front-end direct payment' solution. At present, Medilink is covering more than 1,700 direct payment hospitals in China, which lie in 188 cities in 24 provinces in China.
With the closing of the deal, the business of Nanyan Insurtech is upgraded to an 'MGA+SaaS+TPA' model, which allows the company to open up the link of claims and to literally achieve end-to-end service.
Although there are tons of issues unsolved – just as happens in most other countries in the world, regardless of advanced economies or emerging ones – China's insurance industry is having a good time in general, owing to the increasing health awareness among citizens and the shift in the generation of insurance purchasers.
According to data published by the China Banking and Insurance Regulatory Commission, the original insurance premium of China's insurance industry has witnessed a constant growth in recent years. The figure reached CNY 4.26 trillion in 2019, where CNY 3.11 trillion is attributed to the category of personal insurance, representing 83% of the entire pie.
Among these, healthcare insurance has continuously served as one of the main factors of the premium growth in the industry in recent years. Except for 2017, the annual growth rate on the premium of the category has more than doubled compared to the entire Chinese insurance market throughout 2015-2019.
The growth of healthcare insurance in China shows a positive trend to the newly acquired TPA business of Nanyan Insurtech, which is also the focus of its business in 2020.