Internet a better engine for MetLife China

Digital strategy assists insurer's transformation to meet growing demand for its products

Sino-US United MetLife Insurance Co Ltd, a joint venture between the largest United States life insurer, MetLife Inc, and Shanghai Alliance Investment Ltd, sees the Internet and rise of online social network platforms as a major engine to drive its business in the rapidly evolving Chinese insurance market.

While maintaining its traditional sales channels through banks and agents, the company is focusing on the digital strategy to expand its client base and tap into the growing demand among Chinese customers for easy-to-purchase life insurance products, CEO George Tan told China Daily in a recent interview.

The company is now in discussions with 20 partners, including social media network companies, online retailers and e-commerce platforms owned by major banks, to explore new business models and opportunities, Tan said.

Three company products are already available on Alipay, the online payment service provider backed by China's e-commerce giant Alibaba Group Holding Ltd, Tan said.

"The Internet provides us a better engine and it is substantially transforming the business model of the sector and the way insurance companies interact with their customers," he said.

Previously, most insurance companies used an outbound marketing approach to get its message to potential clients through methods such as advertisements and direct calls. Now companies are utilizing inbound marketing, a trend that seeks customer attention through social media networks and mobile applications, Tan said.

"Now our customer conversion rate of inbound marketing has been risen from 20 percent to 50 percent," he said.

The digital platform has become an integral part of MetLife's long-term strategy to build and improve product recognition in China.

The partnerships with social media networks also enable MetLife China to gain up-to-date knowledge and deeper insights on changing consumer demand and purchasing behavior, Tan said.

New technology and the increasing popularity of mobile apps have become an important catalyst for a Chinese insurance market that was once highly regulated, but now is gradually opening up.

The total assets of the Chinese insurance sector reached 11.3 trillion yuan ($1.77 trillion) by the end of August, an increase of 11 percent from the beginning of the year, according to data from the China Insurance Regulatory Commission.

Foreign life insurers earned total premiums of 51.4 billion yuan last year, up 37.1 percent year-on-year. Their business accounted for a 5.45 percent of market share in China, an increase of 0.56 percentage points, according to the commission.

Despite the slowing Chinese economy, Tan said the Chinese life insurance market boasts great potential for both domestic and foreign players.

In China, the insurance penetration rate, which measures total insurance premiums in proportion to a country's GDP, is only about 3 percent. The rate is about 8 or 9 percent in developed countries.

The declining interest rate and the uncertainties in China's stock market and real estate sectors also have made insurance products an appealing investment channel and wealth management tool, Tan said.

"There is also a growing demand for a good quality of life in China and a rising need for better health and medical services, including life insurance products, regardless of people being rich or poor."

MetLife is among the first foreign insurers that entered the Chinese market after the country opened up the domestic market and adopted market-driven reforms.

The company opened its first representative office, which conducts marketing and non-transactional business, in Beijing in 1995. MetLife China, a joint venture, was set up in 2004.

In 2011, the US insurer merged its two subsidiaries in China into today's Sino-US United MetLife Insurance Co, a 50-50 joint venture between MetLife Inc and Shanghai Alliance Investment Ltd, a State-owned investment company affiliated with the Shanghai government.

With offices in more than 20 cities in China, the company offers life and accidental insurance and savings products to its customers.

Last year, it earned a total insurance premium of 6.39 billion yuan, according to its financial report. It was ranked third among the 28 foreign and joint-venture insurance companies in China. The 28 percent growth rate of its new business premium was much higher than industrial average.

As a US insurance company with a history of nearly 150 years, MetLife has adopted a customer-driven, rather than investment return-driven approach, which has helped the company sail through the recent stock market volatilities in China, Tan said.

"We focus on providing professional and value-added services for our clients rather than pursuing excessively high investment returns, which are often associated with greater risks," Tan said.

"We help our customers with their basic need, which is protecting and preserving their existing assets and to grow them at a rate that outperforms inflation," he added.

Tan said his company remained largely unaffected by the recent sharp fluctuations in the Chinese equities market, which has suffered a dramatic fall of more than 30 percent from its peak in mid-June.

"Unlike many new companies, we appear to be less progressive and more conservative in terms of our investment strategies," Tan said.

"It is because MetLife, as a company with nearly 150 years of history, has experienced many financial crises and seen many failed cases of big insurance companies," he said.

"In China, we are carefully balancing the short-term and long-term opportunities, and solvency is always one of our top priorities," he said.

Tan said that most of his company's assets are allocated to government bonds and high-quality enterprise bonds as it fulfills a strategy of providing good liquidity and satisfying investment returns.

Meanwhile, the company will publish its first China Employee Benefit Trends Study in both Beijing and Shanghai in October, offering their business customers better insight into their human resources strategies to address talent challenges and rising costs in China.

More than 90 of the top 100 Fortune 500 companies are customers of MetLife's employee benefit products, Tan said.

The report will combine the perspectives of both employers and employees. It will provide insight into the financial concerns, needs and expectations of employees. It also delves into the employer perceptions on benefits objectives and management practices, Tan said.

MetLife's Employee Benefit Trends Study, first launched in the US in 2001, expanded its research internationally in 2007. It has since released global editions focusing on employee benefit trends in mature and emerging markets, including Australia, Brazil, India, Mexico, Russia and the United Kingdom.

lixiang@chinadaily.com.cn

(China Daily 09/23/2015 page24)