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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.
Introduction
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.