Since 2022, the listed interest rates of bank deposits have undergone several rounds of reductions, and the market as a whole has shown a situation of "big banks taking the lead and small banks following up".
For example, at the end of 2023, after large state-owned banks and joint-stock banks lowered their deposit interest rates, some urban commercial banks and rural commercial banks will also join the deposit "interest rate cut" team in 2024.
In a low-interest rate market, the insurance industry is not immune.
In 2023, the low interest rate environment and the sharp volatility of the capital market will face multiple challenges such as increased reinvestment risks, compressed profit margins, and suppressed valuations. The investment income of 28 trillion insurance funds has fallen to around 3%, which is at a low level in more than a decade.
How to survive the "period of low interest rates" requires a comprehensive approach by insurance companies, and of course, in this environment, the insurance industry has also ushered in some new stories.
01 Market changes, the strong are always strong
With the advent of the era of low interest rates, Japan's experience may provide a valuable lesson for the mainland's insurance industry.
From the perspective of historical evolution, Japanese life insurance began in the Meiji Restoration period and rose after World War II, showing obvious stage characteristics. Taking the bursting of Japan's economic bubble and the wave of insurance bankruptcies as the two dividing lines, we divide the post-war Japanese life insurance industry into three stages of development: the growth stage from 1954 to 1990: the downturn from 1990 to 2001: the adjustment and recovery stage from 2001 to the present; Corresponding to the three stages of medium and high interest rates, downward interest rates, and low interest rates.
According to the research report of Industrial Securities, with reference to Japan's experience, the life insurance industry can improve its low-cost debt ability + grasp the structural opportunities in the stock market + explore overseas markets + pay attention to the construction of third-party channels such as bancassurance;
From the perspective of the overall performance in 2023, the performance of Huize, which focuses on life insurance sales, not only exceeded expectations, but also made the strategic layout for the future more clear.
According to the financial report, the total premium of Huize in 2023 will reach 5.8 billion yuan, the revenue will exceed 1.2 billion yuan, and the adjusted net profit will be 72.3 million yuan, which has been profitable for 5 consecutive quarters.
At the same time, in terms of cost control, Huize has also achieved "cost reduction and efficiency increase". According to the financial report, in 2023, Huize's total operating expenses will decrease by 15.4% year-on-year, the expense ratio will decrease by 7.3 percentage points, and the gross profit margin will further increase to 37.4%.
In terms of product innovation, taking the company's star IP product "Darwin" series of critical illness insurance as an example, from 2018 to the present, with higher insurance amounts, wider coverage and better service quality, the cumulative number of customers of Darwin series products has reached 310,000. As of the end of the fourth quarter of 2023, Huize maintained stable cooperative relationships with 123 insurance companies, and customized products accounted for approximately 61.6% of total premiums during the year.
At the channel level, by adopting the "online + offline" integration strategy, Huize has effectively broken through the limitations of the traditional insurance industry and achieved wider market coverage and more efficient customer service. In 2023, the new policy premiums facilitated by the IFA platform reached RMB350 million, a year-on-year increase of 73%, and the number of core agent studios increased by 106% compared to 2022.
At the user level, Huize's user base is mainly in high-tier cities, and the user stickiness is strong. According to the financial report, among the users who applied for long-term insurance in the fourth quarter, 65.8% of the users in second-tier cities and above, with an average age of 34.1 years old, of which 41.8% of the users had been insured on the platform, and the repurchase rate increased by 8 percentage points compared with the same period last year.
In this regard, Ma Cunjun, Chairman and CEO of Huize, said: In the future, Huize will grasp the continuous growth trend of the insurance industry in China and Asia, strengthen the full-scenario and differentiated product customization capabilities, online and offline integrated sales and service capabilities, and at the same time, continue to expand the business of the Hong Kong insurance market, and actively explore the development opportunities of the insurance industry in emerging markets in Southeast Asia, so as to achieve the goal of achieving a double-digit revenue contribution rate in the international market in 2024.
02 Choose to go overseas and embrace opportunities
From Japan's experience, due to the saturation of the domestic life insurance market and fierce business competition, leading life insurance companies have accelerated their entry into overseas markets, especially the Asian market, since the beginning of this century to seek new business growth points.
For enterprises, embarking on the journey of internationalization is not only a journey to explore the horizon without boundaries, but also an opportunity to exchange technology and business wisdom around the world.
The success of Huize in China has verified the correctness of its business model, which is reflected in the integration of deep market insight and technology drivers.
At present, Huize has begun to explore the insurance market opportunities in Southeast Asia and further diversify its revenue structure.
According to public information, the average insurance penetration rate in emerging markets in Asia in 2022 is 3.6%, and the life insurance penetration rate is only 2.1%, with Vietnam and Indonesia being as low as 1-2%.
With the growth of local per capita disposable income, it is clear that the first companies to enter the market will gain a valuable window of time.
Sensing this market opportunity, Huize has begun to actively replicate its proven business model in the Chinese market, and expects to achieve rapid growth and market penetration through in-depth understanding and adaptation to the specific needs of the Southeast Asian market.
As for the core of Huize's business model, it lies in the "online + offline" integration strategy, agile product development process, and the use of advanced technology empowerment means to build a set of frameworks with significant replication capabilities.
And in this framework, the advantages of each component are clear.
First of all, the "online + offline" integration strategy not only allows the online platform to be used as a channel for product display and transactions, but also improves the ability of personalized services through user behavior research. Offline service points provide face-to-face consultations, deepening users' trust and satisfaction.
Secondly, in terms of the product development process, Huize adopts agile development methods to quickly respond to market changes and launch insurance products that meet the needs of local users.
For example, the "Gold Satisfaction Multi-Currency Edition", launched in collaboration with CPIC Life Hong Kong, is tailored to the specific needs of the Hong Kong market. This kind of rapid market response and high degree of product customization enables Huize to quickly gain a foothold in a new market.
Finally, in terms of technology empowerment, Huize uses advanced technologies such as AI large model technology and big data analysis to empower it, and shows forward-looking thinking in applying these technologies to optimize customer service processes and improve marketing efficiency.
For example, the application of AI marketing assistants, intelligent risk assessment systems and other tools has significantly improved the operational efficiency of enterprises, while reducing costs and enhancing the company's profitability and market competitiveness.
In general, this set of business model of Huize has formed a closed loop, which has been verified in China, and is profitable.
Therefore, under the condition that the industry experience, capital reserves, business model, and market space have been positively verified, the strategy of opening the Southeast Asian market is bound to create the second growth curve of the enterprise.
03 Supply chain going overseas is a new paradigm in the insurance industry
In fact, in the past two years, companies represented by Tiktok, Shein and Temu have achieved huge international influence.
Of course, not only Internet giants, but also Bubble Mart in the field of trendy toys, Michelle Bingcheng in the field of tea drinks, Anta and FILA in the field of clothing, Midea and Haier in the field of home appliances, and other brands have all laid out overseas markets and achieved good results.
Behind this, these companies have achieved remarkable results by completing commercialization in China, achieving efficient integration of supply chains, and then promoting business models to the world.
And Huize is also leading a new trend in the insurance industry in this wave of "Chinese model going overseas".
On the one hand, driven by globalization and the development of Internet technology, the insurance industry is evolving from traditional insurance services to innovative insurance using big data, artificial intelligence and other technologies.
According to the 2023 Insurance Industry Research Report, the global insurance market is continuing to grow, especially in emerging economies, where more than half (52%) of new global premiums are expected to originate from 2024-2025.
At the same time, the progress of science and technology and the rise of the "insurance+" model are becoming an important driving force to accelerate the internationalization of the insurance industry.
According to the 2023 InsurTech Insights Report, the efficiency and quality of insurance services have been significantly improved through the introduction of technological innovation, so that products can better meet the needs of consumers in different parts of the world.
On the other hand, Huize already has the accumulation of supply chain experience, and through continuous technology research and development and innovation, the company not only improves the operational efficiency of the business, reduces costs, but also provides users with a more personalized and convenient service experience.
This technology-driven service model has shown obvious competitive advantages in the international market.
In general, with the continuous cultivation of Huize in the global market, the company will also bring a new insurance service experience to more users around the world.
This has not only won more influence for Huize in the international market, but also promoted the development and innovation of the global insurance industry. Huize's overseas journey also shows the vitality and potential of Chinese enterprises in the process of globalization and opens a new chapter in global insurance.