Launching an insurtech in China: Lessons for the French market

Rodolphe Strauss
November 24, 2022

A market of 1.4 billion consumers, fundraising over $500 million in Series A capital, meetings with government officials every two weeks… At first glance, starting a business in China may seem like an adventure in a parallel world, unlike any other. But actually, it really isn’t.

Sébastien Gaudin, founder of The CareVoice, an insurtech among the FrenchTech startups in China, talks about his 11 years in the country, and the lessons he’s learned for the French insurance ecosystem, during the second edition of the Inspire evenings held by Seyna.

The future of insurance: services first, then insurance

While “embedded insurance” is present throughout Europe, China and other emerging markets have bucked the trend with the concept of “embedded health”. 

As it is known in the West, embedded insurance consists of integrating an insurance product into a third-party channel; embedded health, on the other hand, integrates a whole ecosystem of digital health services into an insurance product. As a result, as Sébastien explains, differentiation is now based on services, and no longer on the insurance product becoming a simple commodity. 

The CareVoice and other players in the field of embedded health therefore provide a turnkey solution for insurers wishing to offer the services now expected by consumers.

If such paradigm shifts seem far off, they are likely to represent a credible model for the future. Beyond The CareVoice, embedded health already has other champions, such as Ping An Good Doctor. “They raised $500 million in Series A alone and have over 150 million users – the equivalent of over twice the population of France!” explains Gaudin. The French leader Payfit pales in comparison, having raised “only” €254 million in Series D.

For Sébastien, the customer experience must be the focus of insurance professionals, who should concentrate above all on services – as is already the case in Asia as well as in some Latin American countries, such as Brazil, where CareVoice operates with the American giant Prudential. In these markets, users don’t choose insurance for its price or coverage so much as for its convenience (online ordering, teleconsultation, etc.). All of which may inspire the French market!

For more information (and inspiration) on the concept of embedded health, see this report on it.

Little planning, fast implementation

In China, work planning also differs greatly from Western practices: when Sébastien and his team work on priorities for The CareVoice, plans are made 12 weeks out, then updated every 6 weeks. Workshops are held once or twice a week with insurance prospects or clients; in Europe, they are held every three to four weeks. “The aim is to complete projects as quickly as possible, so that they can be tested and adjusted once they are on the market,” he explains.

According to Gaudin, the Chinese clearly deserve their reputation, and can move mountains in no time: they are very diligent and agile in their work, they don’t keep track of hours, and they complete their tasks very quickly. This is an important advantage when building a business in such a big market.

Of course, any parallel with France must be balanced against the significant cultural differences between our two countries. The Confucian legacy is still very much alive in the Chinese mindset. More than a religion, it is a social order based on subordination. Duty and responsibility are emphasised, and authority is highly respected, which naturally influences productivity. Although the French market is itself known to be productive, it could nonetheless take some cues from this short iteration cycle approach with a view to quickly testing its ideas on the market.

Taking on the most complex market

Of course, the Chinese market is huge and offers enormous opportunities. Embedded health is particularly popular in China, where there has been 12% growth among people wanting to invest in their healthcare over the last four years – that’s the equivalent of the German population in terms of new prospects every four years!

However, it is a difficult market to penetrate, as this Accenture report on Chinese consumption habits shows: 80% of them consider the pre-purchase research process to be an integral part of the process. “It’s research now, buy later,” says Sébastien, “which makes the Chinese B2B insurer a particularly difficult customer to access.” 

Yet Gaudin advises French entrepreneurs to follow his example, by going directly to a very demanding market. To do so, developing high-quality products and services is essential, which will make it much easier to tap into other, more easily accessible markets in the future.

Chinese specifics

While there may be similarities between our two countries, China remains in many ways a market apart.

By its sheer size, of course, with 50 cities of over 2 million inhabitants (the equivalent of Paris itself). But also by the scale of the opportunities that this scale generates. The upper middle class is effectively estimated at over 150 million consumers. That’s 150 million people earning over €10,000 a month spread across the country’s major cities. 

This situation offers business opportunities on a scale unlike any other in the world, even in comparison with other huge markets such as India, which is much more heterogeneous. Add to this a fully transactional web, and it is no wonder that insurance companies like ZhongAn acquire several million customers on a single product in record time.

Such scales end up completely inverting the trends and economic models. “There, the user community determines everything”: a company’s strength is the volume of its customer base, and it is this volume that it monetises. This is made possible by greater flexibility with regard to data. In China, monetizing your SaaS directly is complicated; you might even have to pay in order to access the user community of your customer-partners and monetise their user base.

However, not everything is rosy. In red soil, a yellow line is often difficult to make out. “We could say that China has de-regulated somewhat… but not much!” says Sébastien. Indeed, while some standards concerning, for example, bioethics are much more lax than in Western Europe, in China there is a line (hard to identify) that must not be crossed, under penalty of drastic sanctions: whether through the anecdote of a bakery that was shut down and whose managers were detained, or the infamous abduction of Alibaba founder Jack Ma, Sébastien provides us with a bit of insight into the (very heavy-handed) handling of fraud in China!

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