The COVID-19 pandemic has affected many industries and also accelerated the changes in China’s insurance intermediary sector.
The performance of traditional offline insurance intermediary giants such as Fanhua, Datong Insurance Brokers and Mingya Insurance Brokers has declined significantly. However, insurance intermediary channels are still important for sales.
Fanhua released an unaudited financial report for Q1 2020 which showed that a number of indicators fell sharply. In that quarter, the firm achieved net revenue of CNY723m ($102m) which was a 26% year-on-year drop from CNY1.013bn in Q1 2019. The number of its agents also decreased by 3% to 650,000 compared to the same time last year.
The firm claimed that its performance was hit by the COVID-19 pandemic and expected to return to its normal level in Q2. However, the industry generally believes that Fanhua’s Q2 results might be lower than expected.
Another intermediary, Datong Insurance Brokers, was also hit badly. According to chairman Jiang Ming, the company’s traditional offline business fell by almost 50% during the pandemic.
“There is an opportunity to fully return to normal level before the pandemic is completely over,” he said.
Similarly, Mingya Insurance Brokers vice president Wang Peng emphasised that until the pandemic is over, the pressure on new sales and risk of renewal management will always exist.
According to data from the China Insurance Yearbook 2019, there were 2,689 insurance professional intermediaries nationwide as of the end of 2018. Other statistics show that the premium income from insurance intermediary channels was about CNY3.73tn in 2019. This year, this figure is expected to be close to CNY4tn.
While the insurance intermediary sector has a history of 20 years in China, online insurance platforms such as Alipay Insurance has achieved the leading position in the industry in a period of three to four years which proved that digitalisation is the general trend.