Telematics Opportunities in China’s Insurance Market
Telematics insurance products do not exist in China, but several factors will likely bring them to China over the next three to five years.
In Telematics Opportunities in China’s Insurance Market, Celent introduces the present situation in the application of telematics insurance products in the world, outlining some of the products that have appeared on the market and providing an analysis of the different business models. The report provides an analysis of the current development in the motor insurance market and of telematics in China, a description of the preconditions for the development of telematics products, and recommendations for insurance companies planning to enter this market.
There has been sustained growth in the number of civilian vehicles in China, with the number reaching 120 million by the end of 2012. Motor insurance occupies an important position in China’s property insurance market, with its premium income accounting for more than 70% of the total property insurance premium income in China.
Preconditions for the development of insurance telematics in China include:
- Compliance with regulatory requirements. The China Insurance Regulatory Commission is gradually liberalizing motor insurance terms and rates.
- Needs of insurers. The intense competitive environment and business losses have created a need for insurers to develop market segments, seek high-quality customers, and control claims risks.
- Telematics development. At present, there are many telematics service providers in the market that have the technological means to collect vehicle data and are able to provide vehicle owners with rescue assistance services, remote diagnostics and proactive maintenance reminders, fuel management, one-key navigation, and other services. However, because they have not found value-obvious selling points and a suitable profit model, the number of users of personal telematics is limited.
“Insurance products can become an important application of telematics. On one hand, they can promote the development of telematics, and on the other hand, when telematics become developed to a certain level, they will facilitate the launch of insurance products,”says Wenli Yuan, Senior Analyst with Celent's Asian Financial Services Group and author of the report. “If the right business model and balance of interests can be found, telematics service providers and insurers can achieve mutual benefit.”
A Chinese version of the report is also available.