In today's world where the digital wave is sweeping across the globe, the insurance industry stands at a crossroads of transformation. Digitalization has not only reshaped traditional business processes but also brought unprecedented opportunities to the industry. In this context, domestic insurance intermediary companies face a dilemma: whether to separate production and sales and align with international practices, or directly reach users through digitalization or internet plus-related models.

Exploring new paths for the industry: the choice between "production and sales separation" and "removing the intermediary layer".

Looking back at April 2015, the 14th session of the Standing Committee of the National People's Congress made modifications to certain provisions of the 'Insurance Law of the People's Republic of China,' canceling the qualification approval for practitioners such as insurance agents and brokers, marking an important turning point for production and sales separation in the insurance industry. The encouragement of regulatory policies has brought an unprecedented highlight to the insurance intermediary industry. The implementation of the production and sales separation policy has deepened the cooperation between insurance companies and intermediary institutions, allowing intermediaries to focus on market expansion, customer service, and product innovation, while insurance companies concentrate on product development and risk management. This transformation has not only improved the operational efficiency of the insurance market but also promoted the diversification and personalization of insurance products.

Against the backdrop of production and sales separation, the insurance intermediary industry has rapidly risen to become a bridge connecting insurance companies and consumers. Intermediary institutions, with more flexible regulations and a richer product mix, have attracted a large number of insurance agents to leave insurance companies and join the ranks of insurance intermediaries. From 2015 to 2022, the insurance intermediary industry experienced rapid growth, achieving significant results in overall premium income, premium business structure, and the number of insurance marketers.

The rapid development of insurance intermediary institutions has created a huge conflict of interest with traditional insurance companies' pyramid-shaped marketing organizations. Additionally, many insurance intermediary companies do not have strong capabilities, facing certain issues in management capacity, risk coping ability, and long-term operational capability. These problems have become particularly evident under the economic downturn and the impact of the pandemic.

At the same time, the economic downturn has also brought significant operational pressure to the investment side of insurance companies, prompting industry regulatory departments to frequently intervene in an effort to maintain market stability. Firstly, in January 2021, the China Banking and Insurance Regulatory Commission issued the 'Supervision Measures for Informationization Work of Insurance Intermediaries,' aimed at strengthening the regulation of insurance intermediaries and improving their informationization work and management levels. Since the second half of 2023, the "integration of reporting and operation" has had a profound impact on the industry. The continuous reduction in the product reservation interest rate has greatly affected consumers' purchase enthusiasm, while the substantial reduction of intermediary channel fees has dealt a fatal blow to the entire intermediary industry.

Insurance intermediary industry: Exploring and learning from successful overseas models.

From encouraging the development of insurance intermediaries to "clearing idle assets and improving quality," facing the dual pressure of the "reporting and operation in one" regulatory policy and market competition, it has become crucial for domestic insurance intermediary institutions to find their positioning and explore sustainable development paths. Looking globally, international insurance brokerage giant – marsh & mclennan (MMC.US) provides a reference model.

As the world's largest insurance brokerage company, marsh & mclennan's innovative path is representative in the international insurance intermediary industry. marsh & mclennan adheres to a professional rather than a sales-oriented approach, driven by a technology-based development concept. The company is committed to providing high-quality insurance solutions for clients through expertise and technical means. marsh & mclennan starts from the concept of "risk," believing that insurance is one of the solutions to risk. This concept allows marsh & mclennan to deeply understand client needs and provide targeted risk management services. marsh & mclennan's business structure includes two major sectors: risk and insurance services and consulting services. This diversified business architecture enables marsh & mclennan to provide a complete ecological chain from insurance product sales, product design, risk management to a series of added services.

In 1959, marsh & mclennan acquired Mercer, making it a part of the marsh & mclennan group. By acquiring Mercer, the marsh & mclennan group expanded its business scope, particularly in the human resources consulting field. The addition of Mercer enables marsh & mclennan to provide more comprehensive and professional services to clients. Mercer has a broad client base and business network globally, which helps marsh & mclennan further expand its global business layout and enhance its position in the international market. The marsh & mclennan group has also achieved rapid growth and diversified development through the acquisition of other excellent companies, further enhancing its talent reserves and technological strength. In the future, marsh & mclennan will continue to uphold this strategy, continuously exploring and expanding new business areas and market opportunities.

Coincidentally, aon plc (AON.US), as one of the world's leading insurance brokerage companies, also provides clients with risk management, human resources consulting, investment, and integrated solution services, creating value for global customers. On December 21, 2023, aon announced it would acquire the American brokerage company NFP for 13.4 billion dollars. The total consideration includes 7 billion dollars in cash and 6.4 billion dollars in aon stock. The acquisition has brought significant business growth and increased market share for aon. By acquiring quality assets like NFP, aon will further consolidate its leading position in the global insurance brokerage market.

From the perspective of the international market, there is indeed considerable market space in the insurance intermediary field, thanks to the continuous expansion of the global insurance market and the increasing consumer demand. By investing in mergers and diversifying development, insurance intermediaries can maintain a stable and sustainable growth trend.

What is the future of insurance intermediaries in china?

Currently, there are several typical business models in the chinese insurance intermediary market:

1. Internet insurance model. As internet traffic becomes increasingly expensive, platforms that do not rely on their own traffic to drive business growth find it difficult to solve the problem of sustainable profitability. In particular, the "cube" products created by some platforms have greatly damaged the industry's reputation.

2. Compared to the traditional agent model. The development levels of these institutions vary, but they are all working hard under the wave of "reports and business integration." We can observe that the industry leader, Fanhua, has seen a certain degree of decline in both performance and stock price, even resorting to selling themselves to foreign conglomerates.

3. A new model of ecological co-creation. A typical representative is zhongmiao, the first insurance intermediary platform listed on the Hong Kong stock exchange (01471), whose core focus is on building a unique ecosystem and achieving deep collaboration with insurance companies. They provide a variety of product combinations for different users and improve the user experience through continuously enhanced digital capabilities. From the performance disclosed by the company, zhongmiao has maintained a high growth rate even in a downturn in the economy, suggesting that this model of ecological co-creation may be more resilient.

In fact, regardless of the type of business model, continuously meeting user needs and enhancing user experience is the true core. Insurance intermediary platforms must leverage their strengths to enable insurance users to purchase the most suitable products at the most reasonable prices, rather than solely pursuing rapid expansion of their own scale and resorting to outdated methods of buying traffic and building large teams.

Similarly, drawing from foreign industry experience, diversified development and the ability to engage in mergers and acquisitions are critically important for the future of enterprises, which requires insurance intermediaries to have good cash flow and sustained revenue-generating capabilities. Of course, becoming a publicly listed company is a prerequisite for operating in this market.

In summary, the future development of the insurance intermediary industry in china requires enterprises to continually innovate service models, deepen cooperation with insurance companies, and provide better services for users.