WeSure, the digital insurance busines of Tencent in China, is moving into areas that insurtech has so far left relatively untouched: the complex, long-term policies usually sold by insurance agents.
It has launched a small sales team that relies on artificial intelligence to become ultra-efficient, while leveraging digital channels to amass a customer base that traditional insurers can’t otherwise reach.
Alan Lau, Shenzhen-based chairman and CEO of WeSure as well as of Tencent’s fintech unit, says he hopes life and wealth make up 20 percent of WeSure’s business within the next three or four years.
Selling insurance through WeChat
WeSure launched in 2018 with a mainland China insurance broking license and now has about 50 million customers out of 100 million registered users. Most consumers find its products through other services offered through the WeChat app, produced by Tencent.
Initially WeSure attacked distribution issues for smallbore products: offering coverage for mobile phones for people purchasing SIM card top-ups using WeChatPay, or personal accident insurance when using the app to buy subway tickets.
These minor, micro-sized policies began to create user credit profiles, and got them used to buying insurance as a service embedded in WeChat’s lifestyle applications.
Given the extent of WeChat’s role in the lives of most people in China, it has developed a deep risk profile of its users, which can be used to assess risk and underwrite insurance.
Benefits to insurance partners
WeSure is a broker, however, not an underwriter, at least not yet. It relies on the balance sheets of insurance partners, which in turn rely on WeSure’s risk profiling of customers they would otherwise struggle to reach.
“We work with insurance companies and reinsurance companies to combine their actuarial loss ratios with our user behavior models to predict risk,” Lau said, in a conversation with analyst Paul Schulte recorded for Hong Kong Fintech Week. (Tip of the hat to Schulte for skillfully leading the discussion.)
The addition of Tencent’s data predictions has reduced loss ratios on most products by half compared to industry averages, Lau says. Tencent urges its insurance partners to pass those savings to the consumer in order to lower prices.
For now, the relationship with insurance underwriters has been smooth because WeSure doesn’t threaten their existing business. Lau says with partners such as Taikang Insurance, which underwrites WeSure’s health and medical coverage, there is only 10 percent overlap of customers. WeSure has begun to partner with foreign insurers such as AXA and MetLife. WeSure even brokers personal-accident and health products for platform rival Ping An. Its biggest rival is Ant Group.
About 80 percent of WeSure customers were born in the 1980s and 1990s, so they are younger than the typical customer targeted by agents.
New product lines
This year the platform’s health and medical products have grown the fastest, a trend supported by COVID-19. Lau did not divulge specific figures but says first-quarter premiums sold in health and medical this year doubled the premiums sold in the fourth quarter of 2019.
This success is built on the scale of the platform. WeSure offers people people short of cash the money up front to get hospital care, rather than waiting for a claim. It offers cancer drug treatment for as little as Rmb1 per month.
This year WeSure launched services to distribute life insurance and wealth-management-related policies. It is doing so with low-ticket products, on average $100, for one-year policies, sold to a younger generation of first-time insurance buyers.
“A.I. is where we apply how we handle risk, propensity [to buy], and customer service,” Lau said. “But it’s hard to replace humans in the sales process.”
Online-to-offline distribution
Lau says the company offers a “concierge” service through WeChat that is similar to a bank’s relationship manager, creating an online-to-offline distribution model.
Normally a large insurer relying on agents would never be able to do this, as the business is too small.
WeSure’s advantage is it uses artificial intelligence to scale. Its analytics identify which WeChat users are likely to purchase a policy. Its algos can help RMs choose how to engage with customers. “We don’t have to find customers. We already have warm leads,” Lau said.
A.I. enables a WeSure relationship manager to serve up to 5,000 customers via WeChat, providing them with information and content. Today the concierge team is only 200 people. “But it serves a lot of people,” Lau said. “It’s really about scalability.”
Asked by Schulte if WeSure will get into underwriting, Lau said the company does consider this. But for the time being it will maintain its model of partnering with insurance companies.
