Zhong An IPO tells Insurance incumbents that full stack Insurtech has arrived

red carpet

The day has arrived – Zhong An has secured approval for its IPO on the Hong Kong stock exchange!

CB Insights has done a great job breaking down the IPO prospectus.

Zhong An is China’s first fully digital insurance company that was founded in 2013 through a joint effort of Ping An, Tencent and Alibaba.  As mentioned in the link above from CB Insights, Zhong An started with a shipping insurance product for merchants and has now expanded to over 240 product lines.  They have sold 7.2 billion insurance policies, serve 492 million customers and have close to $500 million in gross written premium in 2016.  

At Daily Fintech, we have covered the lead up to the Zhong An IPO here and here.

This is big news, folks.  Here are a few thoughts as to why I think this is so big:

  • Insurtech provides a viable full stack offering to consumers
  • China has now helped to push Asia to the top of the ‘Insurtech leader’s club’
  • Alibaba first, Amazon next?

Insurtech provides a viable full stack offering to consumers

We keep hearing about the number of full stack Insurtech start ups that are have been around and are continuing to pop up.  As I mentioned in last week’s post, these are filling up the ‘new’ circle.  However, for one of these Insurtech startups to now be listed, is huge.  Regardless of how this IPO or the eventually publicly traded stock performs, this represents a big stake in the ground to incumbents to say, ‘Insurtech is here, here to stay, and if you don’t transform, you will continue to see IPOs of other full stack offerings which will disrupt and/or put you out of business’.   More importantly, the public will take notice of this, hopefully doing for Insurtech what Netscape did for the Internet.  

All of us in the Insurtech community send a thank you to Zhong An for making Insurtech mainstream.

China has now helped to push Asia to the top of the Insurtech leader’s club

Silicon valley has been the hub for technology for decades.  Insurtech start-ups, accelerators and VCs are all over there.  There are many more across the states, in big cities like New York and Chicago, but also smaller ones like Des Moines and Detroit.  The US is and will always be a big player in any arena that has to do with technology.

In Europe, Insurtech is an everyday word in places like London and Germany.  Start-ups, accelerators, incubators and investors alike are in these areas and building impactful Insurtech solutions.  

But none of these places, have yet to have an Insurtech start up on a listed exchange.  Being listed on an exchange means you’ve made it.  It means that you’ve earned a seat to be considered with the big boys and that you are recognized as a ‘real’ company.  Asia can boast that now.  Couple that with the amount of things happening in work being done in Singapore to make it a Fintech/Insurtech hub – Asia sits at the top of the charts in the Insurtech ranks currently.  

Alibaba first, Amazon next?

I’m not the first person to mention this, as can be found in this post from 2014 and another in 2016.  Alibaba has shown that it has the ability to scale its business across many different verticals (including insurance) .  A big reason for this is because of its brand presence and customer service.  Alibaba and Amazon are almost synonymous at this point.  So one must think… when will Amazon get into the Insurtech space?  Zhong An got started by offering Insurance for e-commerce; that is clearly no longer low hanging fruit. Amazon is not shy about moving aggressively into adjacent markets and so we can expect to see a big move soon.

While Amazon offers protection plans currently, the key difference between what they offer and what Zhong An offers is that Amazon’s products are underwritten by insurers, while Zhong An’s products are underwritten by Zhong An.  This would make the product offered through Amazon and not by Amazon, unlike the products which Zhong An offers, which they can offer through a number of different partners.

However, with the amount of investment and focus being made into Insurtech by incumbents, especially reinsurers, who’s to say that they won’t partner up with Amazon and launch a company similar to Zhong An in the US?

As for Zhong An, what’s next?  Will they follow the path of Alibaba and start expanding in Southeast Asia?  Or will they continue to expand their product expansion and reach in China solely?

We will continue to monitor how Zhong An does post IPO, as well as how this IPO affects the Insurtech industry.

Here’s to wishing you great success with your IPO, Zhong An.  I sincerely hope you do not follow the same share price trajectory of Netscape or the Lending Club

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Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

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