PingJia Technology's Li: "We are poised to drive usage-based insurance adoption in China"
Insurance telematics solution provider aims to leverage the huge automobile market and high rate of smartphone penetration to grow usage-based insurance in the country
In 2010, China overtook the US to become the largest automobile market in the world. More than 20 million new cars are registered in the country annually, and the number is estimated to have reached about 25 million in 2018, despite it being the first drop in annual new car sales in 28 years. Nevertheless, new car registration is forecasted to hit over 33 million by 2025.
Consequently, China is also the world’s largest auto insurance market. With the country’s high rate of smartphone adoption and rapid development of mobility ecosystems, it has the potential to be an attractive market for innovative products such as usage-based insurance (UBI), where policyholders pay premium according to actual usage of the vehicle and how they drive.
A recent study by PTOLEMUS, a Brussels-based research and strategy consulting firm focused on mobility, showed that the mobile UBI market has grown to 4.8 million policyholders as of the second quarter of 2018, representing almost a quarter of the total. It expects the global market for mobile UBI to expand at a compound annual growth rate (CAGR) of 39% up to 2025 to reach 60 million users, and much of that will come from Asia Pacific, and China in particular.
Not surprisingly, much of the projected growth of the global UBI market will be driven by Chinese insurers and drivers, enabled by domestic insurance technology (insurtech) and telematics solution providers.
One such technology enabler is Shanghai-based PingJia Technology (PingJia), a pioneer in the development and provision of driver behavioural analytics solutions. The company has deep automotive OEM (original equipment manufacturer) expertise and resources. It is vertically integrated within the automotive and insurance industries and is playing a leading role in the development of an international industry standard for telematics and UBI.
Jack Li Xiankun, founder and president of PingJia Technology commented: “In 2009, when most Chinese OEMs and the industry were discussing the future of the “internet of vehicle” (IoV), we collaborated with the ChangAn Automobile Group to showcase the first application of IoV in China at the Beijing Auto Show.”
Creating the automotive and insurance ecosystem
According to PTOLEMUS, UBI has come a long way in China since the premium pricing reform rolled out nationwide in 2017. The market is advancing through onboard diagnostics (OBD), embedded devices and smartphones.
In 2018, several insurers in China have had their UBI solutions passed the review by the China Insurance Industry Association (CIIA). With the regulator being more flexible and encouraging of UBI solutions, the market growth is expected to accelerate.
Li believes that the future of UBI lies in the smartphone and mobile app, he explained: “Smartphones with their in-built array of sensors and smart apps can replace conventional in-vehicle and dedicated telematics. Consumers in China spend relatively longer period on their mobile phones, averaging 14 hours per day, so that is the preferred hardware to use. In addition, newer cars come pre-installed with OBDs which can easily connect with mobile devices, therefore, we remove the issue of added costs of dedicated devices and possible confusion over the options of hardware to choose from.”
He referred to the recent $500 million investment that Cambridge Mobile Telematics received from Softbank as an endorsement of the technology and the mobile UBI business model. He remarked: “In the West and developed economies, there is growing recognition that mobile technology is the game changer. I believe the impact will be even bigger in China because of the size of the market and how everyone has embraced mobile connectivity.”
PingJia is also building an ecosystem of important stakeholders to drive the UBI business. Ping An, China’s largest insurer, is a strategic partner that it works with on the underlying insurance products. The company also has three subsidiaries; ZhongAn Automobile, an automobile dealership, Shanghai XinHe Insurance Broker, an insurance brokerage section, and Shanghai Auto Network, an automobile related networking portal/platform, that cover the entire automobile ownership value chain.
Li shared that PingJia plans to launch in April 2019, the largest real-time information enquiry and exchange platform that will connect 43 million car owners and their vehicles. It will leverage AI behavioural analytics to contextualise the customer driving journey, customised to China requirements and optimised for omni-channel experiences.
The platform will provide Chinese insurance and automotive companies with rich and detailed insights into their customers’ driving behaviour and mobility profiles, enabling them to offer more personalised and increasingly contextual experiences.
Creating common standards for mobile telematics
Li stressed that PingJia is a strong advocate of open source and platform and the creation of common industry practices and standards in order to drive wider adoption. It has developed an open data platform for incident and transport mode detection based on vehicle telemetry, GPS location data, machine and deep learning algorithms. It is leading the insurance industry effort in China Insurance Information Technology Management Company (CIITC) as co-leader to define industry practice and standards.
In 2014, then China Insurance Regulatory Commission (now subsumed into China Banking Regulatory Commission) established a set of IOV application standards for the insurance industry. In 2016, PingJia was appointed as the co-leader of the standards group with People’s Insurance Company of China (PICC). The top seven mainstream insurance companies in China are also members of the standard group. In May 2018, the group issued its first set of standards.
Li hopes that the Chinese insurance industry will create some of the international best practices for the UBI industry in the future, he said: “Although there are gaps between industry, national and international standards, there will be convergence. While the group refers to international practices to develop our standards, we hope over time some that our standards will also be adopted as international best standard. We are already looking at new standards to address some of the innovations that are coming such as autonomous vehicles, as well as the next generation of smart networking technology.”
As it becomes an increasingly recognised leader in providing advanced technology and sustainable business model for the automotive, insurance and data analytics industries, PingJia has secured over RMB 10 million ($1.5 million) in series A and A+ funding from leading China government and commercial venture funds, including China Merchants Venture Capital, Brocade Capital and Hanfor Holdings.
It is planning to launch a series B round of financing later in 2019. There is currently no foreign investment in the company, but Li is open to the idea, he shared: “We hope to find investors and funds that are consistent with the group’s strategy and vision. After this round, there will be no more special fundraising in the future.”
Keywords: Technology, Automobile, Insurtech, Telematic, Usage-based Insurance (ubi)
Institution: PingJia Technology, Chinese Insurance Industry Association, China Insurance Regulatory Commission.
People: Jack Li Xiankun