Tencent secures license for app-based insurance sales
Chinese technology firm Tencent has received regulatory approval to offer insurance products through its chat applications WeChat and QQ. China's insurance regulator has granted the license to Wemin Insurance Agency, in which Tencent holds the controlling stake. Combined, the two messaging platforms have approximately 900 million users. China's internet insurance industry is growing significantly, accounting for 65% of policies purchased in the country last year, according to Oliver Wyman. The marketplace is predicted to more than triple over the next four years, representing a $214bn industry by 2021.
Wemin Insurance Agency Co. Ltd., whose majority owner is Tencent Holdings Ltd., has been granted a license that allows it to sell insurance products, collect premiums and settle claims as an agent. Photo: Visual China

Competition in China’s fast-growing online insurance industry is intensifying, as tech giant Tencent Holdings Ltd. recently secured a new license to sell insurance products on its popular messaging apps WeChat and QQ.

The China Insurance Regulatory Commission (CIRC) said Wednesday it granted an operating license to Wemin Insurance Agency Co. Ltd., a new insurer in which Tencent owns a 57.8% controlling stake. Other shareholders of Weimin include Taiwan-based Fubon Property & Casualty Insurance Co. and a Chinese private equity fund.

Technology companies are flocking to the internet insurance industry in China in recent years. They are riding on a fintech wave, as well as the country’s opening of its financial services sector once dominated by state companies. The hype remains unabated, as shown by the massive oversubscription in the initial public offering of ZhongAn Online Property & Casualty Insurance Co. Ltd., China’s first online-only insurer, in Hong Kong two weeks ago.

In China, about 65% of new insurance policies were sold through the internet last year, according to management consulting firm Oliver Wyman, which projects that China’s technology-based insurance industry will grow to 1.41 trillion yuan ($214.1 billion) by 2021, up from 363 billion yuan in 2016.

Weimin, established in October 2016, has registered capital of 200 million yuan. The license now allows it to sell insurance products, collecting premiums and settle claims as an agent, the CIRC said.

WeChat, China’s most-used messaging app that also has online payment capabilities, has more than 960 million users. Such a massive platform will likely immediately boost the company’s internet finance portfolio.

Some market watchers believe companies are likely to prioritize sales for platforms in which they have a higher stake. This means Tencent may focus more on Weimin than ZhongAn, challenging the growth of the latter. ZhongAn is also owned by Ant Financial Services Group and Ping An Insurance.

Tencent holds a 20% stake of the Hong Kong unit of U.K.-based insurance group Aviva, and a 15% stake of China’s Hetai Life Insurance Co. Both insurers are eye on expanding their presence in digital insurance.

Ant Financial acquired a controlling 51% stake in Taiwan’s Cathay Century Insurance Co. in 2016. Since then, Cathay Century prioritizes technology as a key business driver, effectively competing head-on against other bigger players like ZhongAn.

Contact reporter Leng Cheng (chengleng@caixin.com)