Private equity firm DCP completes strategic investment in Datong Insurance Service

DCP, a leading international private equity firm, announced on Monday the completion of a strategic investment in Datong Insurance Service Co Ltd, becoming the company's largest institutional shareholder.

DCP indicated it will work closely with Datong's management team to create a new insurance ecosystem driven by product customization, demand matching, and a comprehensive service matrix to provide professional insurance services to Chinese consumers.

Founded in 2008, Datong is a leading insurance brokerage firm providing professional insurance services in China. The company offers thousands of insurance products from over a hundred P&C and life insurance companies. The company employs digital tools to effectively connect different parties within the insurance ecosystem and creates value for both insurance companies and consumers. In 2020, Datong ranked among the Top 20 insurance brokerage firms in the world, becoming the only Asian company on the list.

With the continuous growth of the Chinese economy, increased per capita income, and large aging population, demand for medical and healthcare services in China is surging, generating significant demand for commercial insurance and related services. China's current life insurance premium per capita is only 19 percent of that of the United States and 13.5 percent of that of Japan, indicating substantial growth potential for the insurance industry.

As experienced in mature insurance markets of developed countries, the separation of underwriting and sales of insurance products will be inevitable and professional third-party brokerage firms will become an important business model. Currently, the penetration rate of third-party insurance brokerage firms in China is only 2.3 percent compared to 47 percent in the United States and 17.8 percent in Japan, implying significant growth potential for the insurance brokerage sector in China. With rising demand for insurance planning, product comparison and claims services, professional insurance brokerage firms are expected to experience robust opportunities, with more than 20 percent compound annual growth rate expected over the next five years in this sector.