Ping An to invest “up to US$14bn” in tech R&D by 2030
September 10 2020 by Yvonne Lau
Ping An Group (Ping An), China’s largest insurer by market cap, has had a busy few years.
Despite a global pandemic, the Chinese major is moving ahead with a plethora of plans. Topping the list is a move towards greater tech innovation, digitalisation and high-value offerings.
Chairman Ma Mingzhe recently admitted this year has brought challenges, but “now is the time for reform.” He added the company should be moving to develop high-value protection products, with reform projects already “progressing steadily and paying off gradually.”
Indeed, Ping An doesn’t want to be seen as only an insurer, but a serious fintech player (its tagline is ‘leading finance with technology’) — and as a Chinese market leader in addressing climate change and risks.
2019 saw the US$500 million IPO of OneConnect (the firm’s tech and cloud computing services arm) — indicating its commitment to gearing up as a serious fintech player. Last year also saw the insurer sign on to various climate initiatives; they were subsequently featured in Dow Jones Sustainability Emerging Markets Index.
InsuranceAsia News (IAN) caught up with Richard Sheng, Ping An’s group spokesperson, to chat on what’s ahead — tech R&D for its P&C unit and an evolving climate strategy in an increasingly warming world.
IAN: The Covid-19 pandemic has refocused many insurers’ operations to the digital side. Has this led to a digital reboot for Ping An?
Sheng: The Covid-19 pandemic has accelerated Ping An’s digitalisation — as we continue to increase investment in technological R&D and innovation. We are widely applying big data and artificial intelligence (AI) to customer services and business operations.
To date, the group has established eight research institutes with over 35,000 developers and 3,000 scientists; and at the end of June, the firm’s technology patent applications reached 26,000 — more than most international financial institutions.
The main vision is to empower businesses and create social value with technology. And in the next decade, the business will invest up to Rmb100 billion (US$14.5 billion) in technological R&D to drive industrial upgrades and drive positive societal impact.
Across the group, we have leveraged artificial intelligence (AI), blockchain and cloud computing technology; and launched various tech initiatives to reduce ESG business risks, improve business services and shift to data-driven operations. Our strategy is to focus on building five major ecosystems surrounding financial services, healthcare, automotive, real estate and smart city services.
IAN: How can P&C insurers leverage technology and digital efforts for their offerings?
Sheng: For Ping An P&C, [we are] now focused on being both data-driven and user-oriented. P&C sales channels have transformed from relying on offline capabilities to online smart operations.
We utilised AI, big data, optical character recognition (OCR) image recognition, natural language processing (NLP) and more in motor insurance, agricultural insurance and corporate P&C coverage. Through these initiatives, losses in 2019 were reduced by Rmb545 million (US$79.6 million) through various fraud risk models.
A digital risk system (DRS) was developed through the P&C sector, to be used for physical risk identification, analysis and management. The DRS combines insurance, disaster science, meteorology and geography — integrating over 14 billion data points with internal underwriting and claims records.
It’s also connected with China’s national meteorological management system, therefore holding the ability to assess and rate risks for natural disasters — including earthquakes, landslides, debris flows, floods, tsunamis and typhoons. The DRS facilitates risk and precipitation analysis and environmental pollution analysis — meaning staying ahead of the curve for risks and losses.
Ping An’s P&C sector also participated in developing a risk control service system (in a cloud platform format) for environmental pollution liability insurance. The platform has risk assessment models for 18 industries; and environmental pollution sensitivity maps that cover law and regulations, analysis and market dynamics for businesses.
Based on this, August 2019 saw the launch of the ‘Enterprises Environmental Protection Express’ application — introducing online applications for environmental liability insurance and risk assessments for corporate customers. Risk surveillance and management was provided for over 400 key construction projects and issued over 1.1 million disaster-warning SMS messages. Loss reduction and wealth protection through these measures reached Rmb680 million (US$98.4 million).
IAN: Can climate resilience be integrated into a P&C strategy — and how?
Sheng: Ping An P&C is committed to continued improvement in climate-related risk prevention through research and risk management.
For instance, our P&C business unit has initiated research, and developed a risk climate risks management system. We have the DRS (outlined above) and the ‘Smart Environmental Protection’ solution — a tool to monitor and analyse environmental data. These solutions also support the government in underscoring and evaluating natural peril risk in China.
Under the group’s sustainable insurance system, Ping An P&C launched climate-related insurance, such as — catastrophe insurance, environmental liability insurance, and agricultural disaster insurance. In 2019, Ping An P&C had 4,309 environmental insurance policies — at an insured amount of Rmb13.58 million (US$1.96 million) and premium income of Rmb181 million (US$26.2 million).
The company as a whole — the insurance business and banking and investment subsidiaries, all incorporate climate change and environmental indicators for investment decision-making. We also actively support new/clean energy industries.
Building on these commitments, Ping An Group signed international agreements which commit to combatting climate change. In 2019, the group responded to the Task Force on Climate-related Financial Disclosure (TCFD), an initiative of the G20 Financial Stability Board (FSB). We completed a wholesale assessment of climate change risks under the TCFD framework and issued a report.
In the same year, Ping An Group joined the Climate Action 100+ initiative as the first asset owner in China, and engaged in dialogue with companies who are high carbon emitters.
IAN: What’s ahead for the UN’s Principles for Sustainable Insurance (PSI)?
Sheng: In 2020, Ping An Group became the first mainland Chinese firm to sign the United Nations’ Principles for Sustainable Insurance (PSI).
Ping An will utilise this opportunity to conduct exchanges and cooperation with other global PSI signatories — and collaborate to actively manage risks related to environmental, social and governance (ESG) issues. The group remains committed to integrating ESG concepts into the insurance business, and will continue to update its sustainable insurance policy.
By incorporating ESG considerations into Ping An’s insurance products and offerings, we aim to cultivate a sustainable insurance system that addresses customer needs while mitigating environmental risks.
Ultimately, insurance companies can provide risk mitigation measures that can tackle ESG issues and provide value to society. Looking ahead, Ping An will actively incorporate the PSI into the group’s sustainable insurance system.
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