Feb. 26 (NBD) -- China's leading online-to-offline platform Meituan-Dianping gained the approval on Saturday from the government for its insurance brokerage business, foraying into the niche market following the footsteps of internet titans like Tencent and Baidu. 

Zhu Junsheng, professor of Research Institute of Finance, Development Research Center of the State Council, internet firms seek to redevelop their current resources by leveraging the high network traffic.

With a large amount of life service data, Meituan-Dianping will develop insurance products in terms of different scenarios, with an attempt to excavate more new resources.

Photo/VCG

Internet firms eye insurance market

With the boom of insurance brokerage market in recent years, internet giants have started to enter the sector since 2017.

In July last year, a new insurance agency backed by e-commerce titan Alibaba Group obtained the permit for insurance agency business. Later in October of the year, Weimin Insurance Agency, in which Tencent Holdings bought a 57.8 percent stake, was established with the government approval. Baidu also acquired an insurance broker in the same month.

Meituan-Dianping now became the new entrant in the insurance market. A person-in-charge at the company told NBD that with strengthened insurance awareness of Chinese people, various innovative insurance products are rapidly penetrating into the life service industry and the internet insurance market has broad prospect and great potential. 

The person also said that the number of Meituan-Dianping users has exceeded 600 million, with 330 million annual active buyers. Besides, the company has more than 4.5 million partners, covering 2,800 cities, counties and districts. Meituan-Dianping has its obvious advantages in providing value-added services related to insurance.

It is noted that in April 2015, the Beijing-based company launched insurance services related to takeaway but was criticized for the lack of insurance business license.

Yao Hu, general manager of Meituan-Dianping's insurance business, said that after obtaining the license, the company will remain open and welcome cooperation. Meituan-Dianping will cooperate with various institutions in the insurance sector to provide diverse insurance services for users with innovation and patience and boost the development of both internet and insurance industries, added Yao.

Insurance brokerage licenses in great demand

According to data released by the China Insurance Regulatory Commission, China now has thousands of insurance agencies. Those firms gain intermediary fees or commission fees by selling insurance products to third parties or offering services to insurance companies.

As China has tightened the regulation of insurance licenses since 2017, firms are all eyeing licenses for insurance intermediaries which will allow them to integrate resources of insurance sales, products and claims. Last year, a total of 23 insurance intermediaries were successfully approved by the authority.

To get access to the niche market, some enterprises opted to buy equities or licenses. 

For instance, at the end of 2017, enterprise software and service provider Yonyou Software announced that it would buy 60 percent stake in Qianhai Mintaian Insurance Brokers Co., Ltd..

Moreover, the price of licenses for insurance intermediaries is also climbing. NBD noticed that the current price for a insurance brokerage license (with a record for internet insurance sales) has jumped to 30 million yuan (4.7 million U.S. dollars).

The transfer price for such licenses is 20-30 million yuan (3.2-4.7 million U.S. dollars) each, and those allowing online sales of insurance products are priced higher, a person familiar with financial license trade said to NBD.

Such licenses are in short supply, particularly those supporting nationwide operations, he noted.

Email: zhanglingxiao@nbd.com.cn