2.1 life insurance from the perspective of channels
China’s life insurance channels are divided into offline agent channels, bank postal channels, brokerage channels, e-marketing channels and Internet insurance channels. Among them, the premiums of agent channels and bancassurance channels accounted for 60.6% and 27.7%.
Each channel has its own advantages and disadvantages. The advantage of agent channels and bancassurance channels of traditional insurance enterprises lies in the high success rate of offline sales, but only one or several products can be sold; Insurance brokerage companies can sell dozens of products at the same time, but customers lack a sense of brand ownership.
2.1 life insurance from the perspective of channels
Development history of China’s life insurance channels:
1) 19821992: mixed operation of property and life insurance, The People’S Insurance Company (Group) Of China Limited(601319) occupied most of the market share. The main sales modes are direct selling system and part-time agency;
2) 19921998: AIA brought the personal agency model into China, Ping An, CPIC and other companies followed suit, and personal agency became the mainstream of life insurance sales;
3) 19992017: various channels have sprung up, forming a sales channel pattern dominated by personal insurance and supplemented by bancassurance;
4) 20172020: bancassurance channels are suppressed by policies, Internet insurance is on the rise, and personal insurance channels are booming and declining.
2.1.1 life insurance from the perspective of Channel – current situation: the channel of individual insurance has entered the downturn
The driving factors for the development of personal insurance channels are mainly the number of agents and per capita production capacity.
Before 2021, individual insurance mainly implemented the “crowd tactics”, and obtained premium growth through continuous recruitment of new people and “reason list” sales mode. However, with the rise of flexible employment abroad and the decline of demographic dividend, the attraction of insurance agents is much less than before. In addition, due to the impact of the epidemic, the decline of customers’ insurance demand, the difficulty of face-to-face sales, the rise of online insurance and other factors, the number of agents continues to decline, dragging down the premium of new policies.
Since 2020, all insurance companies have opened channel reforms one after another, gradually changing the driving factor from the number of personnel to increasing per capita production capacity.
2.1.1 life insurance from the perspective of Channel – current situation: the channel of individual insurance has entered the downturn, and the essential reason for the blocked development of individual insurance channel is that it is in two transformation stages:
1) transformation from having insurance to rich protection: personal insurance channels mainly sell serious illness insurance. The tactics of “covering 100 million people with serious diseases” in China are not applicable, but it is difficult to expand new customers. However, from the perspective of guarantee amount, there is still much room for improvement. Considering medical inflation, at present, the compensation items of serious illness insurance are far lower than the cost of disease.
2) the transformation from extensive development of agents to high-quality development: the increasing difficulty of customer maintenance and the pursuit of customization of customer protection demand all put forward higher requirements for the quality of salespeople. AIA with high quality salespeople maintained a good growth in new single premium.
2.1.2 life insurance from the perspective of channels – current situation: differentiation of brokerage channels
Online brokerage channels ushered in high growth. Under the joint action of many factors, such as the gradual rejuvenation of the main consumer groups and the impact of the epidemic on offline sales, the online process of insurance has accelerated. Online brokerage platforms such as waterdrop, smart choice and ant insurance have expanded rapidly with their own customer resources or large-scale online marketing, far exceeding traditional insurance companies.
As traffic competition and supervision become stricter, the development of online brokerage still faces many challenges. Shuidi, Huize and other brokerage companies need to face not only the increasingly fierce traffic competition, but also the new regulatory requirements. The regulation has put forward many hard indicators for insurance companies operating Internet insurance, and brokerage companies focusing on the products of small and medium-sized insurance companies must return some unqualified products. In addition, online Internet insurance has disadvantages such as the absence of customers’ offline services, and the development of online brokerage is blocked and long.
2.1.2 life insurance from the perspective of channels – current situation: differentiation of brokerage channels
Mingya and other offline brokerage companies have high-quality marketing teams. The offline brokerage sales model is similar to the agent model, but the brokerage channel can represent the products of dozens of insurance companies, with a wider range of choices. Some offline brokerage companies represented by Mingya have set up high recruitment thresholds to build high-quality teams. According to the data of Mingya in 2020, more than 76% of brokers have bachelor’s degree or above (about 25% of traditional insurance companies), and there are 1149 MDRT (global elite agent honor), far exceeding traditional insurance companies.
Offline brokerage companies compete with individual insurance channels. The high-quality team has realized the transformation of the driving force of the life insurance industry from the number of people to the per capita production capacity, and solved the contradiction between the current agent’s ability and demand. Thanks to the elite team, the commission income of Mingya achieved positive growth in 2020, and the per capita income is far higher than that of traditional insurance enterprises, resulting in some elite teams falling off from traditional insurance enterprises and turning to brokerage companies.
2.1.3 life insurance from the perspective of channels – the future: bancassurance is expected to fill the vacancy
Bancassurance nbvm improved significantly. In the past, the products of Bancassurance channels were mainly low value, quick return, single payment (one-time payment) and simple short-term annuities. Since 2017, CBRC Document No. 134 has restricted annuity products, forcing bancassurance channels to turn to high-value life-long life, pension and other regular products. At present, Guoshou and Taiping bancassurance have basically delivered products for a period of time, and the proportion of PICC and Xinhua has increased steadily. The increase in the proportion of regular delivery drives the channel nbvm back to normal.
2.1.3 life insurance from the perspective of channels – the future: bancassurance is expected to fill the vacancy
Bancassurance channels benefit from wealth management. As the main financial product consignment agency for residents’ wealth management, banks have the advantages of many customer resources and rich financial products. It is easier to realize the scene marketing of annuity insurance and endowment insurance.
Major insurance companies have made frequent moves in the development of Bancassurance channels. When the individual insurance channel is in the doldrums, all insurance enterprises have strengthened the construction of Bancassurance channel, and the channel scale and value are expected to usher in high growth.
Related targets: Ping An Insurance (Group) Company Of China Ltd(601318) with group collaboration and New China Life Insurance Company Ltd(601336) with high proportion of Bancassurance channels.
