Social media giant Tencent has led an Rmb200 million ($28 million) Series B investment in Xiaobang Guihua – an insurance advisory service platform on WeChat.
Existing shareholders including Sequoia, Bluerun Ventures and Reinsurance Group of America joined the round. They also invested in Xiaobang Guihua’s Series A round in November last year.
The startup is an insurance advisory platform based on WeChat’s Mini Programme. From a variety of different companies, customers can select an insurance policy and then purchase it directly via Xiaobang Guihua’s Mini Programme within WeChat.
Xiaobang Guihua also uses WeChat public accounts to advertise its insurance offers.
The platform began life as an advertising platform for domestic insurance companies in 2014. After two years’ experience, it decided to turn its traffic volume into profit.
After the investment in November last year, Xiaobang Guihua began to standardise its insurance purchase procedures and build a user-friendly platform. Today, its WeChat Mini Programme can deliver everything from insurance policy inquiries to online purchases.
China is the world's second-largest insurance market. According to data from Iresearch, China’s premium income was $541 billion in 2017, almost one-third of the $1.3 trillion premium income in the US. But the premium income only took about 4.4% of China's total domestic GDP that year, much lower than the 11% from the UK, 7% from the US, and even lower than the global average of 6.1%.
Many have bet heavily on the Chinese insurance market. There used to be a trend to buy insurance in Hong Kong which led to a surge in Hong Kong's insurance market. Until the first half of 2019, mainland Chinese still contributed a 7.9% year-on-year premium growth in Hong Kong.
But mainland insurance buyers may shift their focus back to the domestic market after recent protests in Hong Kong. “Many of my customers have cancelled plans to come to Hong Kong and buy insurance as they have concerns about recent protests,” one insurance agent said.
Now is perhaps a good time for Chinese investors to lay the groundwork of a domestic insurance market. In a regulatory update published earlier this month, Beijing issued a notice that allows internet giants to apply for an insurance broker license.
This is great news for internet giants like Tencent and Alibaba. As most insurance agents are building their networks via Tencent’s WeChat, Tencent clearly wants a share of this billion-dollar insurance market.
Unlike Alibaba, which has set up its own subsidiaries to acquire insurance-selling licenses, Tencent mostly buys into other companies which already have them.
Xiaobang Guihua already has a licence as an insurance broker.
The startup claims to provide 100,000 services for its customers. With investment from Tencent, it intends to use proceeds to develop its service platform on WeChat even further.
