Ping An's Contextualized Medical Insurance Strategy: Driving the Future of 'Insurance + Healthcare' Ecosystem
On January 4, 2016, Ma Mingzhe, the “helmsman” of Ping An, announced at the morning meeting on the first working day of the new year that Ping An had officially entered the 3.0 era.Mobile, Specialized, Social, and Scenario-based, these are the four key tones he has set for the company’s future development. Just yesterday, Ping An publicly announced its “Internet + Insurance Ecosystem” initiative on VCBeat for the first time and launched four new types of medical insurance products. The open collaboration between insurance companies and internet healthcare enterprises mentioned therein appears to reveal Ping An’s strategic approach for the second half of the game in the insurance industry.
In August this year, New China Life Insurance, China Life Insurance, and China Pacific Insurance successively announced profit warnings. In the first half of 2016, the net profits of the three insurers fell by 50%, 65%-70%, and 46% year-on-year, respectively.
According to Ping An Insurance’s semi-annual report released this year, the company achieved counter-trend growth in its overall performance. The net profit attributable to shareholders of the parent company reached RMB 40.776 billion, a year-on-year increase of 17.7%. Shareholders’ equity attributable to shareholders of the parent company stood at RMB 363.948 billion, an increase of 8.9% from the beginning of the year. The company’s total assets amounted to approximately RMB 5.22 trillion, representing a 9.5% increase from the beginning of the year.
A careful analysis of its business reveals that in the first half of 2016, Ping An Property & Casualty Insurance, securities business, trust business, and other asset management businesses all experienced varying degrees of decline. Among traditional businesses, only life insurance achieved a year-on-year growth of 42.7%. The most significant growth was seen in the internet finance business, whose profits surged from RMB 609 million in the first half of 2015 to RMB 7.142 billion in the first half of 2016, representing an increase of over 1,072.74%.
Ping An of China’s Performance in the First Half of 2016 (Data Source: Ping An of China 2016 Interim Report)
According to data recently disclosed by the China Insurance Regulatory Commission (CIRC) in December, gross written premiums for property insurance reached RMB 777.305 billion, a year-on-year increase of 8.73%; gross written premiums for life insurance amounted to RMB 1.655668 trillion, up 33.12% year on year; gross written premiums for health insurance totaled RMB 384.180 billion, surging 73.08% year on year; and gross written premiums for accident insurance stood at RMB 69.334 billion, representing a 17.37% year-on-year growth. It is evident that a significant portion of the industry’s overall growth can be attributed to the health insurance and life insurance sectors.
In the short term, Ping An appears to have remained resilient, buoyed by the explosive growth of its internet finance businesses—such as Lufax and One Account Pass—and its life insurance operations. However, in the long run, the growth rates of its traditional insurance and financial services are expected to mirror China’s economic trajectory, following an “L-shaped” pattern. Without more substantial reforms, the company could well face a stagnation in profit growth.
There are two ways to change the status quo:
1. Seek incremental marketsStarting from scratch to explore untapped financial markets is fraught with obvious challenges, regardless of whether such opportunities actually exist. Taking the insurance industry as an example, China’s insurers have limited accumulated data. Consequently, the pricing of many insurance products largely relies on referencing foreign premium rates with certain adjustments. This approach lacks scientific rigor in rate calculation and carries significant risk; any deviation can severely undermine the operational stability of insurance companies, while also indirectly affecting policyholders and insured individuals. In the absence of data sharing among insurance companies, entering a completely unfamiliar market entails prohibitively high trial-and-error costs.
Second, increase insurance investmentHowever, for a long time, China has developed a situation where insurance is prioritized over investment, and the source of funds is emphasized over their utilization. In terms of investment philosophy, insurance companies have not yet fully established a core mindset centered on value investing, rational investing, prudent investing, and long-term investing. Technically, they are not yet sufficiently proficient in asset-liability matching management, strategic asset allocation, and portfolio management techniques. Regarding investment strategies, the depth and accuracy of their judgment and grasp of market conditions also need improvement.
Therefore,When both the upper and lower paths prove unviable, it is more prudent to adopt a middle-ground approach by targeting the existing stock market and identifying multi-scenario industrial long-tail opportunities within familiar financial products.The next trillion-yuan market for insurance will inevitably be healthcare and elderly care, a trend that can also be glimpsed from Ping An’s life insurance business. Among these, the life insurance segment continues to show significant growth, while at the current stage, the premium scale of pension insurance and health insurance still lags far behind that of life insurance. Calculated based on the insurance density development targets outlined in the new “Ten National Guidelines,” China’s health insurance market size is projected to reach RMB 1.5 trillion by 2020, marking just the beginning of its growth phase.
Specific Performance of Ping An Life Insurance Business (Data Source: Ping An 2016 Semi-Annual Report)
The lack of an explosion in pension and health insurance is closely related to the deep-rooted nature of traditional healthcare. While cost containment in medical insurance is a major policy trend, it is extremely difficult for commercial insurers to penetrate the healthcare system. With medical data unable to be shared and insurance products hard to design, companies do not need reckless stubbornness in the face of prolonged stagnation. Instead, adapting to the situation by leveraging scenario-based approaches to enter the healthcare and elderly care sectors is a wiser choice.
The Future of Business Is a Battle of Big Data. The Emergence of Every Tech Giant Requires Breaking Down Industry Barriers, Flattening and Contextualizing Independent Industrial Dimensions to Achieve Multidimensional Data Integration。
Tencent, Alibaba, and Ping An have all staked their chips on social networking, payments, and financial insurance services, underscoring the significant value of these three sectors. Their commonalities lie in cross-domain application capabilities and vast growth potential. Any one of them has the opportunity to achieve absolute population coverage.
According to Maslow’s hierarchy of needs, finance and payment services fall under the category of human safety needs. By definition, the entire organism functions as a mechanism pursuing security; human sensory organs, effector organs, intelligence, and other capacities are primarily tools for seeking safety. Even science and one’s outlook on life serve to fulfill safety needs, which naturally encompasses finance and payment systems.
Social interaction belongs to a higher level. The needs at this level mainly include two aspects: one is the need for affection, and the other is the need for belonging.
Maslow's Hierarchy of Needs Diagram (Image source: Baidu Images)
Ping An’s top-level design integrates financial services into people’s daily life scenarios—healthcare, food, housing, transportation, and entertainment. Centered on users’ five major needs, it embeds finance into online lifestyle services through the various offerings and products available on its digital platforms.
Whether it is Tencent’s foray into payments, Alibaba’s push into social networking, or Ping An’s five major scenario-based strategies, in a sense, each represents an effort to continuously seek upward leaps or downward expansion across the hierarchy of needs associated with their respective products. Products that satisfy only a single level of needs may carve out a niche, but they are unlikely to evolve into comprehensive, data-scale platforms in the future.
Taking WeChat as an example, moving down from the higher-level need of social networking to the lower-level need of payment encountered relatively little resistance. In contrast, Alipay, as the preferred mobile payment platform, transitioned smoothly into lower-level needs closely tied to basic physiological demands, such as local lifestyle services via Koubei. However, its attempt to migrate upward into the higher-dimensional realm of social networking has left it trapped in a dilemma. Admittedly,At the current stagePing An does not have ultra-large user bases like WeChat and Alipay; to achieve a shift in demand hierarchy, it can leverage a multi-brand, multi-product service strategy to compensate.
This also reflects the patterns and logic of changes in the hierarchy of needs:
1. The replacement, addition, or reduction of needs generally occurs between adjacent levels;
2. The replacement, addition, or reduction of hierarchical levels is easier when moving from higher to lower levels, and more difficult when moving from lower to higher levels;
It is akin to an ordinary person suddenly becoming warm and considerate, which everyone readily accepts; whereas if someone suddenly becomes aloof and distant, they are often shut out.
In the future, in an environment where diverse big data serves as the core value of enterprises, this kind of multi-level demand and multi-scenario thinking will be ubiquitous, while the ultimate oligarchs may still be only a few companies.
For financial insurance to truly integrate into various industries, it must begin with scenario-based approaches, capturing comprehensive data from a vast array of fragmented scenarios. This represents a boundary-less, fully cross-disciplinary strategic landscape.
Ping An’s 1.0 Era spanned 18 years. Centered on traditional financial services, it evolved from an insurance company into a comprehensive financial group, accumulating substantial offline resources and management expertise.
Ping An’s 2.0 Era took nearly a decade to unfold. It was defined by “technology-led integrated finance,” which tightly integrates integrated financial services with modern technology, empowering traditional financial services with internet-based and other advanced technological tools to deliver an unparalleled financial consumer experience for users.
In 2016, Ping An officially entered the 3.0 era. As of the end of June, Ping An’s total number of internet users reached approximately 298 million, representing a 23% increase from the beginning of the year; the number of new financial customers converted from internet users amounted to 6.37 million, accounting for 35.9% of the total new customers acquired in the first half of the year.
Ping An's Three Development Stages
For this era, Ma Mingzhe defines it by five key characteristics: mobile-first, professionalization, social integration, scenario-based services, and the construction of open platforms. The model has evolved from a closed online platform for personal financial asset trading into an open financial asset trading platform serving the entire society, all industries, and both individual and institutional clients. In the healthcare sector, initiatives such as “Ping An Good Doctor,” “Yibao Yizhangtong” (One-Account Pass for Medical Insurance), and “Wanjia Clinics” are typical representatives of this 3.0 phase.
At the core of this strategy is scenario-based customization. From the perspective of hierarchical needs, scenario-based insurance refers to insurance products designed to address people’s safety concerns in the course of any given activity. For instance, Ping An has collaborated with Taobao in the e-commerce sector to launch “Fangxin Tao,” an online shopping insurance tailored for both buyers and sellers; partnered with the internet home renovation platform Tubatu to introduce “Jiazhuang Bao,” a home renovation insurance; worked with the car-sharing platform Baojia Zuche to offer “Zuche Bao,” a liability insurance for drivers of rented vehicles; and joined forces with the ride-hailing platform Didi Chuxing to provide “Chengche Bao,” an accidental injury insurance for passengers. These initiatives represent Ping An’s efforts to create diverse usage scenarios, transforming financial products that were once perceived as serious, distant, or even cold into more accessible, varied, and user-friendly applications.
Previously, Chen Jin, CEO of ZhongAn Insurance, noted in a media interview: “In the internet era, the insurance industry’s ‘channel-is-king’ paradigm is shifting to ‘scenario-is-king,’ with fragmented scenarios becoming valuable once integrated. This is the key distinction between internet-based insurance and traditional insurance.” It is thus evident that scenario-based approaches are becoming an industry consensus in the financial and insurance sectors.
In scenario-based logic, Ping An does not need to build its own distribution channels, as healthcare channels are too numerous and fragmented. Even with its substantial financial resources, Ping An may not be confident in successfully managing all of them end-to-end. Therefore, adopting an open ecosystem partnership strategy has become an excellent tactical approach.。
Starting with Ping An’s core strength in insurance products, the company has partnered with various internet healthcare platforms to develop scenario-based offerings. By integrating social, mobile, and professional features, it has created a novel product with an internet-native structure, thereby establishing Ping An’s “Internet Healthcare + Insurance” ecosystem.
Not coincidentally, this December, Ant Financial also unveiled a new smart city solution, aiming to provide enhanced foundational capabilities for areas such as government services, water and gas bill payments, smart parking, and healthcare services through an open-platform approach. One can only remark that the strategic thinking of tech giants is always remarkably similar.
However, does this “one center, multiple channels” model mean that Ping An’s partner companies will all be reduced to its “Wage Earner”? In my view, this is not the case. This brings us to the “Future Healthcare Industry Acceleration Program,” jointly launched on December 23 by Ping An, VCBeat, VCBeat Research Institute, Legend Capital, and other industry infrastructure and capital service institutions.
This initiative bridges innovative healthcare enterprises with support service providers such as Ping An, centered on the mission of “serving future healthcare companies to accelerate transformation in the medical industry.” It offers startups a diverse range of services, including investment and debt financing, as well as collaboration facilitation with insurance and pharmaceutical companies.
In other words, the “Internet Healthcare + Insurance” ecosystem envisioned by Ping An involves collaborating with healthcare startups to co-design insurance products and build distribution channels, while also providing these enterprises with various industry services. This is a mutually beneficial partnership model that offers startups the advantage of “leveraging the strength of a major partner,” thereby avoiding any awkward dynamic where one party merely works for the other.
While the concept is sound, at this stage, mainstream insurance companies in China remain generally cautious due to constraints related to policy, products, technology, and data. Although insurance products targeting specific diseases or particular demographic groups occasionally emerge, most are merely pilot initiatives. The integration of insurance with internet healthcare has not yet been implemented on a large scale. This situation primarily stems from three key issues.
First, data sharing.Any enterprise considering a partnership with an insurance giant like Ping An will inevitably weigh the confidentiality concerns surrounding data sharing, particularly for platform-based companies with large user bases. To put it plainly, beyond its core insurance operations, Ping An also oversees internet healthcare ventures such as Ping An Good Doctor and Wanjia Clinics. While these enterprises cannot access data from Ping An’s other business units, the risk of Ping An absorbing their data into its own ecosystem would far outweigh any potential benefits.
But this is not an insurmountable problem; ZhongAn Insurance serves as a prime example. In fact, whether it is Alibaba, Tencent, or Ping An, their data is treated as strictly confidential by ZhongAn. Under the legal checks and balances of non-disclosure agreements, there is virtually no possibility of such data being leaked to any other institution or individual.
ZhongAn’s products inevitably rely on third-party data; otherwise, actuarial analysis and pricing would be impossible. To address this, ZhongAn first established initial computational models and algorithms, which were then tested against each party’s data. Subsequently, the respective parties returned the test results to ZhongAn for model refinement, after which the updated models were sent back to them. Through several such iterative rounds, ZhongAn never accessed any raw third-party data, ensuring that the data remained secure and confidential, while ZhongAn ultimately completed the insurance pricing. Only after the product went live, with actual transactions occurring, did these data genuinely reside within ZhongAn’s systems for its use.
With ZhongAn Insurance serving as an excellent case study, Ping An can follow suit to achieve data sharing with enterprises.
Second, the risk of adverse selection in internet insurance.Compared with traditional insurance, the greatest advantage of internet-based insurance is its rapid response capability, particularly in enabling personalized product customization regarding premium rates, insured subjects, and coverage liabilities. However, compared with traditional operations, current internet-based insurance exhibits weaker risk control, with a higher prevalence of adverse selection and moral hazard. A significant contributing factor is that products distributed through internet channels are largely issued without underwriting. Due to information asymmetry, insurers are inevitably placed in a distinctly disadvantaged position, which invisibly substantially increases the risk costs associated with pricing and underwriting.
The China Insurance Regulatory Commission’s Interim Measures for the Supervision and Administration of Internet Insurance Business, issued in 2015, explicitly stipulates that for insurance products whose provision of rapid and convenient services to consumers is impeded by factors such as the need for on-site underwriting, loss assessment, and investigation, insurance institutions shall immediately suspend the sale of the relevant insurance products and take effective measures to rectify the issues. If the problems remain unresolved after rectification, the sale of the relevant insurance products shall be terminated.
Therefore, to address the issues of adverse selection and risk control, it is essential to leverage big data, with users’ health status and creditworthiness being the two most critical indicators. To construct a more accurate user profile, Ping An needs to collaborate on data sharing with third-party physical examination centers, health management organizations, or financial institutions (including Ping An’s own financial ecosystem), while ensuring data security and privacy, and even emulateImplementing UBI-based pricing and underwriting, similar to auto insurance., of course, all this is based on user authorization.
Third, the emergence of gimmick products.Smog Insurance, License Plate Lottery Insurance, Moon-Gazing Insurance, “Bare-All” Insurance… In recent years, the internet insurance industry has seen a proliferation of bizarre and meaningless insurance products. Ultimately, these are merely pseudo-demands created for sensationalism. Where does the problem lie? It stems from a mismatch between supply and demand. The core of insurance demand is protection; it is a product and service based on people’s need for security, which is fundamentally different from gambling or lotteries. So-called multi-scenario applications do not refer to far-fetched, entirely hypothetical product innovations, but rather to safety demands arising from various internet medical platforms, healthcare institutions at all levels, and related services.
As Ping An, it is essential to engage in deep collaboration with healthcare enterprises and medical institutions to fully uncover user needs, thereby preventing the emergence of such “distorted” insurance products and safeguarding the reputation of all stakeholders as well as user trust.
“Internet Healthcare + Insurance”: The challenges faced are far more than just these. Since Ping An is determined to build an internet insurance ecosystem, it must be well-prepared. As for how to achieve this, the true key lies in the depth and breadth of collaboration among all parties. How sincere is Ping An, and what resources can it offer to encourage healthcare enterprises to cooperate willingly? I believe this is what everyone is most concerned about.
At the end of this article, it is customary to discuss the future. It is foreseeable that if Ping An’s “Internet Healthcare + Insurance” strategy gains momentum, it will inevitably achieve breakthroughs in the following three areas:
First, Ping An and healthcare companies have joined forces to develop new insurance products.By leveraging the unique characteristics and scenarios of both platforms, we will develop exclusive scenario-based and fragmented products. I have outlined the following items:
1. Registration and Consultation: Supplemental Insurance for Registration Fees;
2. Physician Groups: Doctor-Patient Relationship Insurance, Medical Malpractice Insurance;
3. Pharmaceutical E-commerce: Single-disease critical illness insurance, drug quality insurance;
4. Medical Devices: Product Quality Insurance, Product Liability Insurance;
5. Healthcare Institutions: Medical Malpractice Insurance, Surgical Accident Insurance;
6. Chronic Disease Management, Health Management: Chronic Disease Management Insurance;
7. Smart Wearable Devices: Sports Insurance, Insurance for Specific Surgical Procedures.
Second, collaboration on big data.If medical big data and insurance big data can achieve synergistic collaboration, it will significantly enhance Ping An Insurance’s capabilities in insurance product design, actuarial pricing, and claims operations, thereby enabling the development of precise products that truly meet consumer needs. For healthcare enterprises, this collaboration not only addresses platform users’ security requirements but also helps cultivate user consumption habits from the payer’s perspective. Therefore, sharing big data can promote the mutual advancement of both the healthcare and insurance industries.
Third, Healthcare Payment and Insurance Cost ControlFrom a policy perspective, controlling healthcare costs remains the most urgent need in China’s current medical system. Ping An’s exploration of the “Internet Healthcare + Insurance” model is not merely a means to sustain profit growth; the accelerated integration of these two sectors can expedite the sharing and development of healthcare payment systems, healthcare big data, and insurance big data. The ultimate goal is that only by integrating insurance innovation with medical resources can we effectively control reasonable healthcare expenditures and optimize the allocation of medical resources.
Looking back at 2016, connectivity and integration have seemingly become the root source of corporate value. From the perspective of value negotiation, the formation of Ping An’s “Internet Insurance + Healthcare” ecosystem will undoubtedly integrate the value chains of financial insurance companies, healthcare enterprises, and users. The shift in hierarchical needs and the realization of multi-scenario applications involve considerable challenges, as can be imagined. Nevertheless, the ultimate focus remains on big data.
In the future, sparing no effort to leverage existing resources and achieve data integration will become the critical lifeline for corporate development. In the healthcare sector, the second half of the three-way rivalry among Tencent, Alibaba, and Ping An has only just begun.