(Yicai Global) Aug. 15 -- Chinese internet giant Tencent Holdings Ltd. [HKG:0700] will expand in the online insurance market in the second half of this year by selling products through the mobile payment function on its vastly popular messaging platform WeChat, online news site All Weather TMT said.
The Shenzhen-based firm agreed to allow Fubon Property and Casualty Insurance Co., a subsidiary of Fubon Financial Holdings Co. [TPE:2881], Taiwan's second-largest financial holding company, to develop and import insurance products.
We are applying for a license," a WeChat insider told All Weather TMT.
The partnership will include property and casualty insurance products, which are popular in the online insurance market, and life insurance, which is less popular online but makes up a larger share of the insurance sector, the insider said.
The Fubon subsidiary mainly provides property and casualty insurance, its website states. It also offers short-term health and accident insurance and provides long-term life insurance products on behalf of Sunshine Life Insurance Co.
"Chinese Internet companies Baidu Inc. [NASDAQ: BIDU], Alibaba Group Holding Ltd. [NYSE: BABA] and Tencent, known collectively as BAT, cannot ignore the online insurance market," said Chen Maochuan, a financial analyst at global consulting and research firm Analysys Mason. "Their aim is to control upstream links in the industrial chain and core user resources to become integrated, open online financial platforms."
WeChat had 889.3 million monthly active users at the end of last year, data from Tencent's annual report show. The number of WeChat Pay's monthly active users has grown nearly 11-fold over the past two years, according to Analysys Mason. WeChat's 900 million-user strong ecosystem will be the key to Tencent cracking the insurance market.
As Tencent boasts a very large client base, a powerful credit system and traffic growth, the company's mobile payment platform has a significant advantage in the targeted distribution of insurance products in terms of its ability to provide a sales scenario and product information, All Weather TMT cited a WeChat Pay employee as saying.
Insurance premiums reached CNY3.1 trillion (USD455.88 billion) in China last year, but the online insurance market has yet to take off, data from the China Insurance Regulatory Commission show. Most innovative insurance products sold online are small-value, high-frequency and fragmented property and casualty products, while traditional life insurance products are rare.