Health GWP Up 115.6% and Proprietary Platforms Revenue Surged 8.1 times
HONG KONG, Aug. 27, 2020 /PRNewswire/ -- ZhongAn Online P & C Insurance Co., Ltd. ("ZhongAn Online" or "ZhongAn" or the "Company", HKEx: 6060), the leading online InsureTech Company in China, announced its unaudited interim results today for the six months ended 30 June 2020 ("the reporting period").
In the first half of 2020, ZhongAn Online continued to pursue growth with quality, against the backdrop of the outbreak of the novel coronavirus ("COVID-19") and a challenging global macro environment. Driven by the rapid growth of health and lifestyle consumption ecosystems, gross written premiums ("GWP") increased by 14.7% year-on-year to RMB6,766.5 million. In particular, GWP generated from the health ecosystem grew by 115.6%, as the outbreak of COVID-19 significantly raised consumer awareness for health insurance protection, and reinforced consumers' willingness to shift their insurance purchase from offline to online. ZhongAn Online has effectively captured this market opportunity and realized rapid growth by offering a superior digital user experience. In addition, rapid development of the ecommerce industry during the pandemic also led to a 40.4% increase in GWP from the lifestyle consumption ecosystem.
Operating performance of the Company's underwriting business improved significantly during the reporting period, benefitting from the optimization of business structure and improving underwriting quality across ecosystems. In the first half of 2020, the combined ratio improved by 4.8 percentage points to 103.5%. In particular, the loss ratio was 56.6%, representing a year-on-year decrease of 7.3 percentage points. In addition, unannualized total investment yield reached 3.6% despite market volatility in the first half of 2020. During the reporting period, the Company's insurance segment achieved a profit of RMB622.1 million, representing an increase of 94.6% year-on-year. Net profit attributable to owners of the Company increased by 418.8% year-on-year to RMB490 million.
Health ecosystem strategic upgrade: from health insurance to health ecosystem, from low touch to high touch
In the first half of 2020, as a core ecosystem of ZhongAn, the health ecosystem provided health insurance and medical services to approximately 12.35 million users and recorded GWP of RMB3,049.2 million, representing a year-on-year increase of 115.6%. Its contribution to total GWP increased to 45.1%. The increase was attributable to the Company's continuous efforts in enhancing users' insurance awareness and providing them with a one-stop "insurance coverage plus medical services" experience by actively establishing a closed-loop ecosystem of medical services. Within the health ecosystem, GWP generated from ZhongAn's core products, namely the Personal Clinic Policy Series (尊享系列), was RMB2,737.8 million, representing a year-on-year growth of 138.2%. The Personal Clinic Policy Series products provided coverage for over 8.7 million customers, representing a year-on-year increase of approximately 209%.
At the payment end of the medical service industry, ZhongAn Online's health insurance business fully capitalized on its advantages in product design and service integration. ZhongAn Online has formed a closed-loop ecosystem through the integration of services including health insurance, ZhongAn Internet Hospital and Nova Technology. This platform provides users with a one-stop solution which focuses on insurance protection and encompasses services that cater to disease prevention, health management, medical consultation, and medical information, among others, all of which assist users in managing their health more efficiently and conveniently and achieving their wellness goals.
In July 2020, the Company launched an outpatient and emergency services version of the Personal Clinic Policy (尊享e生), making the products entering a new era. While providing insurance protection to users, ZhongAn Internet Hospital offers 24/7 access to one-on-one online video consultation with 2,000 doctors, and the online purchase and doorstep delivery of medication to patients, exemplifying the in-depth integration of insurance coverage with medical services. Starting with low-touch health insurance services, ZhognAn Online expanded into high-touch offerings, such as online diagnosis and chronic illness management. These services created more use scenarios that cover users' medical needs throughout their lives and enhanced user loyalty and engagement, which introduced tremendous development opportunities for the health ecosystem.
The Company actively promoted the intelligent operation of its health ecosystem driven by artificial intelligence ("AI") and big data, with an aim to enhance risk control and operational efficiency. Leveraging the platform built by Nova Technology, the Company connects with the systems of more than 1,000 hospitals (over 80% of which are second and third class or above) in 28 provinces, and regional medical information platforms of 16 provinces and cities (covering 60% of the top 10 provinces in terms of sales health ecosystem), realizing a direct online connection with medical information databases, and establishing a digitalized one-stop risk control system. For example, for underwriting, the Company used intelligent underwriting models and personal health profiles to identify high-risk insurance applications, which is expected to save around RMB25 million a year. For claims, its medical knowledge graphs and the intelligent claim settlement model both helped the Company to effectively cut the loss ratio, which is expected to lower annual claims by approximately RMB60 million. Combined, the Company expects to reduce 3% of the claims.
In addition, in the first half of 2020, claim settlement efficiency, which is measured by the average daily processing volume of claim settlement documents per person, increased by 70% from the second half of 2019, underpinned by its data-driven automatic adjustment system, intelligent claim settlement model, and artificial intelligence applications. The Company applied OCR technology to automatically sort and rotate claim documents for imaging and keyword extraction with the automation rate exceeding 90%.
GWP generated from the proprietary platforms increased more than 8-fold, effectively enhancing long-term value generation
In the first half of 2020, the Company leveraged its technology and digital operation capabilities to further enhance marketing, customer acquisition and service capabilities of its proprietary platforms. GWP generated through the Company's proprietary platforms was RMB1,048.7 million, which was approximately 8.1 times higher than the same period of 2019 and accounted for 16% of total GWP, an increase from approximately 2% in the first half of 2019. 34% of the total GWP of Personal Clinic Policy Series were generated through proprietary platforms, up from 11% in the first half of 2019.
Relying on algorithm-driven targeted marketing, its proprietary platforms will effectively increase users upsell, which will allow the Company to further maximize users' life time value. In the past 12 months, upsell rate of the Personal Clinic Policy Series reached 11%. Furthermore, ZhongAn Online can enhance user loyalty and brand awareness effectively by leveraging the value-added services on its proprietary platforms. For example, the Company's proprietary platforms are connected with different medical services, enabling users to access the medical services under different health status such as healthy, sub-healthy or illness.
Captured InsureTech market potentials and capitalized opportunities in technology business
The rapidly evolving external dynamics during the first half of 2020 drove far-reaching changes with clear implications for the long-term development of the entire InsureTech industry. Impacted by COVID-19, users are now shifting their insurance to online faster than ever, which is motivating traditional insurance companies to accelerate their digital transformation to meet user needs. Meanwhile, regulatory authorities also set out clear targets for the industry's online transition rate to reach 80% for several core insurance lines.
By leveraging its experience gained over the years, ZhongAn Online has developed sophisticated InsureTech products and solutions to help insurance industry participants achieve digital transformation in different areas, including business, technology, data and organizational structure. In the first half of 2020, revenue from technology exports was RMB119.9 million, representing a year-on-year increase of 26.2%, with 64 contracted clients. The Company's intelligent marketing solutions were well-received by the market, which enables traditional insurance companies and their agent teams to implement digital transformation, optimize customer acquisition cost, and establish a sustainable closed-loop user growth model. During the reporting period, the Company served a number of life insurance and P&C insurance companies.
The Company has actively explored the international market and launched innovative products together with its business partners. In Japan, the Company served SOMPO, one of the top three local property and casualty insurance companies, and other two leading local insurance companies and online platforms. Through the systems developed by ZhongAn, they have connected with various local ecosystem partners and launched a variety of usage-based and scenario-based insurance coverage products. In Singapore, NTUC Income, the largest domestic comprehensive insurer in Singapore, also established API connections through ZhongAn's system with various local partners, including catering, public transportation and food delivery. NTUC launched a user-based insurance package which allows users to dynamically expand their coverage amount and scope based on their own needs. In addition, ZhongAn's cooperation with Grab, a leading O2O platform in Southeast Asia, further expanded to Indonesia, where they launched usage-based property insurance products to cover the risk of damaged goods during delivery by Grab Express. During the reporting period, the Grab ecosystem has generated over 12 million policies with the support of ZhongAn Online's InsureTech strengths.
Virtual Bank ZA Bank and Digital Insurance ZA Insure jointly explored Hong Kong's Fintech market
ZhongAn Online strived to apply its Fintech capabilities to Hong Kong's traditional financial markets, with an aim to improve customer experiences, understand user needs and assist in implementing inclusive finance within the Hong Kong market.
On March 24, 2020, ZhongAn Online's virtual bank, ZA Bank, officially opened for business, and became the first virtual bank in Hong Kong. It offers users a real 24/7 banking service experience that includes account opening, deposit, transfer, loan, and other services through its one-stop mobile APP. As of June 30, 2020, account opening at ZA Bank can be completed in as fast as 2 minutes and 8 seconds. The age of users of ZA Bank ranges from 18 to 93 and the platform has accumulated a total of more than HK$2.4 billion in deposits.
On May 18, 2020, the Company's digital insurer, ZA Insure, also officially launched in Hong Kong. ZA Insure upholds the same ideology to provide a simple and quick services, as well as affordable and flexible insurance products through a 24/7 online platform. ZA Insure has so far launched four life insurance offerings based on user needs, including ZA Life Protection, ZA Cancer Protection, ZA Heart Attack & Stroke Protection, and ZA Accident Protection, providing users with protection for term life insurance, cancer, cardiovascular disease and accidents. Leveraging its big data technology and decision tree model, the Company has designed thousands of use cases, which allow users to complete the health underwriting questionnaire in the simplest way, with shortest health underwriting questionnaire comprised of only 3 questions, enabling ZA Insure to enhance its user experience.
In the second half of 2020, ZhongAn Online will continue to adhere to the two-pronged strategy of "Insurance + Technology". By upholding the principle of high-quality growth and technology-empowered development to reduce costs and improve efficiency, the Company will incorporate technology development and innovation across the insurance value chain and continuously optimize underwriting efficiency and user experience while commercializing insurance technology strengths in domestic and international markets. This will enable ZhongAn Online to become the partner of choice in the digital transformation and upgrade of the global insurance industry.
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About ZhongAn Online P&C Insurance Co., Ltd (HKEx: 6060)
ZhongAn Online P & C Insurance Co., Ltd. ("ZA Online" or "the Company") is a leading online-only InsureTech company in China. Founded in October 2013, the Company offers insurance products and solutions in five major ecosystems, namely health, consumer finance, auto, lifestyle consumption and travel. ZA Online seamlessly integrate technology across its insurance business, and now exports its technology to help other companies accelerate their growth. On 28 September 2017, ZA Online became the first Fintech company to be listed on the HKEX (Ticker: 6060) and in 2018, the Company started expanding its Fintech and InsureTech solutions to various international markets.
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Email: [email protected]