(Hong Kong, Shanghai, 14 September 2020) Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An" or the "Group", HKEX: 2318; SSE: 601318) announced that its life insurance arm, Ping An Life, is driving business in four key areas: its growth model, marketing, product strategy and channel integration.
During the 2020 interim results conference, Lu Min, Chief Insurance Business Officer of Ping An, said, “Despite the unprecedented challenges and the industry’s inertia to sweeping changes, we are confident that this reform will pave the way for Ping An Life’s further development in the next decade.”
Ping An Life’s Reform Will Set It Apart
The previous round of business reform for Ping An Life began in 2004. Based on market conditions, Ping An switched from investment-linked insurance products to protection products and withdrew from low-value bancassurance channels. The number of insurance agents shrank to 200,000 from 320,000. These changes laid a strong foundation for the next decade.
The current transformation program was proposed in 2018 and officially launched in the second half of 2019. Due to the changes in the market, customer demand and technology over the last decade, the traditional agent model is not sustainable, Mr. Lu said.
The current reform involves four key areas:
- Growth model – Ping An will continue to enhance the quality of its team of agents, and will shift its focus from fast growth of the team to a balance between quality and scale. The number of Ping An Life's agents at the end of June 2020 increased by 1.2% quarter-on-quarter, and the number of agents will stabilize gradually.
- Marketing – The traditional system is manually driven, which results in some operational inefficiencies. Ping An will use various technologies to shift to data-driven operations.
- Product strategy – Ping An can draw on its strengths in integrated financial services to build a “life insurance +” product portfolio to meet the range of customers’ needs in daily life. Ping An will provide customers with tailored and comprehensive offerings in life insurance, health care, elderly care and education.
- Channel integration – Ping An is moving from a two-pronged online and offline business model to online-and-offline model. For example, during the COVID-19 pandemic, Ping An Life used online platforms such as the Jin Guan Jia insurance policy management app and E-Sales app to support agents' online operations. Through core applications such as Smart Customer Services and Smart Quick Claim, Ping An Life already provides customers with 24-hours, seven-days-a-week services for claims and renewal. In the first half of 2020, Ping An Life processed 1.69 million claims. Compared with the same period last year, the share of claims settled within 30 minutes via the Smart Quick Claim increased from 47% to 50%, with the quickest case taking only one minute.
Ping An Life’s New "Basic Law" Emphasizes Quality Before Scale
A key step in Ping An Life’s transformation has been the update of its Basic Management Measures for Life Insurance Business Personnel, or Basic Law. Mr. Lu said the amendments include organization reclassification, agent ranking by experience, and increased long-term investment in agents.
- Organization reclassification will clearly differentiate the roles of various units. Ping An will divide business units into three categories, a productivity-focused category, a balanced development (between labor and productivity) category, and a high-quality labor-focused category.
- Agents will be grouped into three categories: new recruits, outstanding agents and supervisors, with tailored policies and practices for each. For new recruits, Ping An has increased and extended the duration of their subsidies. For outstanding agents, Ping An has offered more incentives to encourage them to recruit outstanding agents. For supervisors, the focus will be on digital management.
- Ping An will increase long-term investment in agents in areas such as benefits, remuneration and management.
Mr. Lu said, “Ping An Life’s Basic Law supports the objective of Ping An Life’s business reform, which is to grow stronger before growing bigger, focusing on quality before scale. In the revision of Ping An’s Basic Law, we have shifted from rapid growth of our team of agents as the key business growth driver, to pursuing both agent quantity and quality. We will continue to emphasize recruitment, but will expand our force with quality agents, instead of pursuing sheer numbers.”
Ping An Life has completed the top-level design of most of the transformation projects, and launched pilot programs at branches for nearly half of the projects. Most of the reform projects will be implemented this year, with the results reflected in the business at the start of 2021.
Ping An recently announced its 2020 interim results: operating profit attributable to shareholders of the parent company in the first half of 2020 increased by 1.2% year on year to RMB74,310 million. Operating profit after tax of the life and health insurance business rose by 6.4% year on year to RMB51,535 million.