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InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.

Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.

Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.


Attitude of the country towards InsurTech-services

According to the 14th Five-Year Development Plan InsurTech issued by Insurance Association of China in December 2021 (14th Five-Year Plan), it is noticed that “technology” is playing an increasingly important role in promoting the high-quality development of the insurance industry for the past few years. For the new five-year period, the authority emphasises its encouragement on Insurance Institutions to improve and upgrade online insurance services with InsurTech.

Legal affairs

Obligations and requirements to provide InsurTech-services

In China, providing online insurance services to the customer is subject to the supervision of the insurance authority, China Banking, and Insurance Regulatory Commission (CBIRC). 

Firstly, if an entity operates and develops an insurance business, including sales, underwriting, settlement of claims, surrender, complaints handling, and customer services, such entity shall obtain an insurance license issued by CBIRC. Depending on the type of the insurance business, the entity shall obtain different insurance licenses with different fund requirements. Generally speaking, the paid-in registered capital of a small-size insurance company shall be at least RMB1 billion (equivalent to approximately USD157 million or EUR142 million), and the paid-in registered capital of a national insurance agency/brokerage company shall be at least RMB20 million (equivalent to approximately USD3.1 million or EUR2.8 million). Upon obtaining the license, the entity shall further comply with a series of detailed requirements to carry out the “online” insurance business, including but not limited to, the construction of the internet infrastructure (e.g. implement the multi-level protection system for cybersecurity and obtain corresponding certificate) and the insurance products design (e.g. design special products for online distribution) etc.

Secondly, if an entity will not engage in the above-mentioned insurance business, such entity is allowed to provide auxiliary services of Internet technical support for insurance consumers and insurance institutions. Such entities are strictly prohibited from providing any insurance sales service, especially, comparing prices of different insurance products. In practice, making profits from providing consultation to insurance customers – e.g. assisting in insurance application, making insurance plans, will be deemed as providing insurance sales services rather than auxiliary services by CBIRC. For example, the leading insurance technology company, Hangzhou Fansheng Technology, was imposed by CBIRC in 2020 with a fine of RMB0.98 million (equivalent to approximately USD154 thousand or EUR139 thousand) for providing insurance agency/brokerage service without proper license due to the said consultation services through “Duo Bao Yu” platform.

Additional comments regarding the legal situation for InsurTech-services or what InsurTech’s must be aware of in this business area

In China, insurance services, as an important financial services sector, are highly regulated. At present, only insurance companies, insurance broker companies, insurance agency companies and insurance surveyors and loss adjusters companies incorporated in China with the insurance license issued by CBIRC are allowed to engage in internet insurance business as described above.

Although there is no foreign investment restriction on the insurance industry, the application for establishing a foreign-invested insurance institution will still be under strict review of the CBIRC and the foreign investors shall have experience in the insurance broker/agent area. The applicants may take years to obtain an insurance license. 

Economic conditions

Market size for InsurTech-services and biggest companies in this business area

InsurTech-services market is a growing market. According to the 14th Five-Year Plan, from 2018 to 2020, the total investment in the InsurTech reached RMB94.185 billion (equivalent to approximately USD14.8 billion or EUR13.4 billion). For the year of 2020, the total investment in the InsurTech is RMB35.1 billion (equivalent to approximately USD5.5 billion or EUR5 billion), accounted for 0.63% of the operating income; the number of formal InsurTech staff is approximately 26,000, accounting for 2.51% of the total number of the insurance practitioners. 

Further, considering that the InsurTech services are closely related to the insurance business that shall only be carried out by companies with a proper license, generally speaking, the big insurance companies will have their own InsurTech company to provide relevant services internally. It might be hard to identify the biggest InsurTech companies according to the market shares, while it is known that the technology companies within the big insurance group might be the largest ones, such as Ping An Technology (Shenzhen) Co., Ltd and China Life Ecommerce Co., Ltd. 

Additional comments regarding the economic situation for InsurTech-services or what InsurTech’s must be aware of in this business area

In 2021, CBIRC issued the Regulation on Management of Internet Insurance Business to specify the detailed rules for operation of online Insurance. Under these new rules, the CBIRC strengthens the requirements on the entry thresholds of market players. The license holders are allowed to run the online insurance business in creative ways and the pure technology companies are limited to participate in the business through technology supporting line, rather than insurance-related business. 



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