Last week Chen Lin resigned as CEO of loss-making insurtech Zhong An Online according to a report from 21st Century Business Herald. The startup was originally a joint venture between Alibaba’s Ant Financial, Tencent and Ping An. In 2017 the company listed on the Hong Kong stock exchange.
Its current market capitalization is $3.64 billion, with the stock price 80% down from its 2017 high.
Zhong An was perhaps the first corporate to deploy blockchain at scale. On various e-commerce platforms in China, users can take out micro-insurance to cover the cost of shipping returns. The company has issued billions of policies logged on its blockchain.
Expansion continues at a rapid pace with 2018 revenues up 89 percent to 11.26 billion yuan ($1.7 billion). But losses increased by 80 percent to 1.8 billion yuan ($272 million). The company continues to invest heavily in research and development, spending 850 million ($128 million) in 2018. The technology subsidiary had particularly poor figures earning 110 million yuan in revenue with a loss of 340 million yuan.
While Lin will remain involved as a director, the move has caused concern as there have been other recent departures, including the CEO of its technology subsidiary.
Complaints against China’s online insurers are also rising. Disputes about Zhongan Online’s claims process and sales increased by 273.48% and 1270% respectively. But other online insurers such as Taikang and Pingxin Insurance also saw significant rises.
While the level of disputes is worrisome, the big issue is that for online micro insurance to be feasible, costs have to be kept low. That means automated claims and ideally a low level of disputes.
Despite the bad news, Zhong An and its technology subsidiary have achieved a lot in a short time. Last year we outlined how Zhong An’s blockchain technology is being deployed in various industries from tracking diamonds to health. SoftBank invested $100 million for the technology subsidiary to expand in Asia. And it has partnered with Japanese insurer SOMPO.
Ping An’s OneConnect is a competitor to Zhong An’s Technology arm. It’s planning an IPO in New York in September.