Online insurance company approved

The establishment of a new online insurance joint venture between Internet companies Alibaba Group, Tencent Holdings and Ping An Insurance has been approved by China's insurance regulator, marking a new era for insurance sales, an official newspaper reported Tuesday.

The venture, named Zhong An Online Property Insurance, has completed the regulatory approval process and the China Insurance Regulatory Commission (CIRC) will release the news soon, the Shanghai Securities News quoted unnamed sources as saying.

"Alibaba submitted the application last year, but currently we have not received any information from the insurance authority," said Zhang Lei, a member of staff with Alibaba's public relations department.

The CIRC's news department failed to respond to questions sent by the Global Times by press time.

Alibaba will be the largest shareholder in the new insurance company with a 19.9 percent stake, followed by Ping An Insurance and Tencent, who will each hold a 5 percent stake. There are also six smaller shareholders including online travel agent services provider ctrip.com, IT company Rising Technology and several investment companies.

The new venture will not open any branch office offline, but will operate all insurance sales and claims settlement on the Internet. The company will focus on liability and guarantee insurance, the report said.

The establishment of an online insurance company will be a groundbreaking event in China's insurance sector, experts said.

Ma Mingzhe, chairman of Ping An, told a press conference on August 24, 2012 that the new venture would aim to take advantage of Tencent's and Alibaba's large number of Internet users, and develop a new sales channel for Ping An's insurance products.

"With the increasing number of Internet users and the booming e-commerce market in China, it is important for insurance companies to follow the trend and develop online sales channels," Feng Po, an analyst at financial consultancy China Venture, told the Global Times Tuesday.

Some insurance companies have already tried to sell insurance products online. For example, Guohua Life, a small Shanghai-based life insurance company, sold 116 million yuan ($18.6 million) worth of insurance products within four days in December on taobao.com, Alibaba's customer-to-customer e-commerce platform.

"Alibaba and Tencent are leaders in e-commerce and social networking sectors, so the launch of the online insurance venture will have an impact on traditional sales channels of insurance products such as banks," Zhang Meng, an analyst with IT research firm Analysys International, said in a research note Tuesday.

Feng warned that selling insurance online could also bring potential problems such as leakage of personal information and possible problems in after-sale services. Further regulations related to online insurance are likely to be released by the CIRC, he noted.

"The online channel's impact on traditional channels will not be big in the short term, as people need time to accept the new method of buying insurance," he said.