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The Peoples Insurance Company of China (PICC) Property and Casualty Co
Ltd, China's largest insurer, excluding life insurers, is promoting online
sales to reduce costs and improve its bottom line.
Although Internet sales, enabled by its e-PICC platform launched two
years ago, now account for less than 1 per cent of its total sales, the
company expects the new channel's contribution to grow to 5 per cent as
the market matures and clients become more familiar with online
purchasing.
Internet sales will potentially help the insurer
reduce a fair amount of acquisition costs, given its huge business scale.
PICC Property and Casualty's direct premiums
written in the first half of this year totalled
37.4 billion yuan (US$4.5 billion), according to its first-half financial
statements.
Foreign experience suggests the cost of online sales is only 10 per
cent that of setting up sales outlets. Online sales are also the most
cost-efficient distribution channel in China and leads other channels such
as intermediaries and direct sales by a broad margin, company executives
said.
"E-commerce marketing has incomparable cost advantages," said Wang He,
executive vice-president of PICC Property and Casualty.
But the new channel has yet to be recognized by China's growing ranks
of Internet users, he admitted.
Chinese Internet users now number a staggering 87 million, 6.4 million
of whom shop online on a regular basis, official statistics indicate.
However, a recent survey by PICC Property and Casualty found that as many
as 35.6 per cent of respondents were unaware that insurance is also
available online.
"It shows that insurance e-commerce faces the problem of hugely
insufficient investment in publicity," Wang said. "E-commerce is very
difficult for insurance," he said in an interview, adding that online
sales of insurance policies account for less than 1 per cent even in
countries leading in this area, such as Germany.
"It requires effort from the entire industry, and will benefit society
by reducing consumption of resources," Wang added.
Online sales will also reduce the local industry's reliance on
traditional channels of agencies or bancassurance - insurance sales in
banks -, where a commission war has been eroding insurers' profitability,
analyst say.
PICC Property and Casualty will soon launch its second generation of
e-series policies, which will feature travel-related products, company
executives said.
The underwriting
operations of China's first listed insurance company,
which launched its initial public offering last year in Hong Kong, has
witnessed strong growth this year. Turnover from the motor vehicle sector,
the main pillar in the mainland non-life insurance sector, increased by a
robust 4.8 billion yuan (US$578 million) in the first six months of this
year.
(China Daily) | 
Updated: 2004-11-22 10:41
