China Pacific Insurance goes digital
By Carol Chen & Linda Xu
There is a growing affinity for Big Data in the insurance industry as it looks to improve business processing efficiency, revenue premiums, and marketing precision. Tang Hailong, Network Director of the Infrastructure Operation Department at China Pacific Insurance Company (CPIC), recently spared some time for WinWin to discuss how this is manifesting at his company.
Data center construction
WinWin:Surging service traffic has created a digital deluge. What technical challenges has this deluge posed to CPIC's network architecture?
Tang Hailong: CPIC's network architecture faces two challenges. On the one hand, surging application data requires higher network bandwidth, posing a challenge to our existing architecture. On the other, 90% of CPIC's servers have been virtualized. During virtualization, a large number of virtual machines (VMs) must be deployed, with a lot of data migrated, leading to an explosion of east-west traffic that will greatly impact our network architecture. CPIC built a new data center in Chengdu and adopted Huawei's virtualization technologies to address these challenges.
WinWin: What are CPIC's considerations in data center (DC) construction and future development?
Tang: CPIC's first DC is now ten years old. In 2005, we built our first centralized data center in China, but of a small scale. In 2009, we built a new one in Shanghai, and a disaster recovery center the next year. We have now completed the design and planning for our Chengdu data center, which is expected to come into use by the end of this year.
Most DCs for financial institutions are deployed in a centralized way. CPIC plans to build "three data centers in two cities." We have already completed the Shanghai data center and its remote disaster recovery center in Chengdu. We also plan to add another disaster recovery center in Shanghai, with each recovery center responsible for different tasks. The Chengdu data center will focus on disaster recovery and the development of testing environments. What's more, new virtualization technologies make the Chengdu data center highly scalable, allowing it to quickly respond to Internet application requirements. We position the Chengdu DC as an innovation base, where we will pilot some new Internet application services.
Internet-based mindset
WinWin: The Internet is having an impact on all industries. How is CPIC responding?
Tang: CPIC has been a leading player in the industry in terms of adopting an Internet-based mindset and developing mobile applications. We set up a special insurance sales platform in 2013 that can be installed on mobile devices. Customers can buy insurance products, have their insurance application examined, and claim payments on this platform. In 2014, we started to launch applications on WeChat to sell insurance products more easily and promote our brand image. The official "CPIC E-Service" account is the first platform in our industry to support WeChat payment and provides comprehensive services that cover online quotation, booking, enquiry, payment and information check. Customers can buy car/life/property/travel accident insurance on our WeChat platform in a self-service manner. We have built a website called the “Life Insurance Square” (www.601601.com), combining B2C with O2O to offer products and services regarding maternal care, car maintenance, and health care. Therefore, I think CPIC has already gained a head start in integrating insurance with the Internet and we will accelerate this pace.
WinWin: Big Data is a vital insurance asset. How is CPIC leveraging it for precision marketing?
Tang: CPIC offers both property and life insurance. We can sell life insurance to property insurance customers and vice versa. In 2012, CPIC conducted an in-depth analysis of our customers with an aim of cross marketing for property and life insurance, our initial trial of digital transformation. Meanwhile, insurers can use Big Data to improve their overall performance through more accurate pricing, deeper relationships with customers, and more effective and efficient loss prevention. We have so far completed transformations for dozens of programs through precision marketing based on in-depth analysis of customer data.
Leveraging the IoT
WinWin: Forward-thinking insurance firms are realizing that they can increase their profitability and improve risk modeling by investing in the Internet of things (IoT). What’s CPIC angle here?
Tang: The IoT was originally implemented in our property and casualty segment using a concept known as usage-based insurance for vehicles – as drivers drive, insurers remotely gather data and analyze performance in near-real-time. The automation of what was once manual tracking allows underwriters to improve pricing and insurers can close claims more quickly and improve loss adjustment ratios. The end result of this process improvement is a positive customer experience.
CPIC learned that by applying an IoT methodology to how customers deal with risk behind the wheel, we could gather the raw data needed to help raise overall profitability, and we could do this while rewarding less risky customers with discounts and enhancing their value proposition to the consumer (roadside assistance, vehicle recovery, vehicle maintenance alerts, etc.). But this was just the beginning.
WinWin: The IoT ecosystem involves countless players. What kind of role does insurance have to play, and how can they play it better?
Tang: The insurance industry will utilize IoT technologies across the entire IoT ecosystem. We can never transform to be an equipment vendor. So I hope more IoT devices can be invented that can be installed in cars or deployed in homes to collect and share customer preferences and better understand group and individual buying behavior. More insightful analytics allow the offering of services and products that customers want on demand. We are eager to build a seamless omnichannel experience using IoT sensors.
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