EP2: Smart Insurance: How AI Is Powering the Insurance Digital Transformation at Ping An

Thank you.

China's transformation over the past four decades has been remarkable, evolving into the world's second largest economy. The structural shift towards a service-driven economy is exciting, with services accounting for 57% of GDP. Key opportunities include the rise of China's middle class, now exceeding 400 million people, and demographic shifts driving demand for wealth management, healthcare, and senior care. Ping An has built deep expertise in these areas. The insurance market is 5.7 trillion RMB in 2024 premiums, with only 4.2% penetration, indicating significant growth potential. We see long-term structural growth and are uniquely positioned to capture these trends.

The regulator has introduced new guidelines centered on intense regulation, risk prevention, and high quality development, while emphasizing international competitiveness. Two key policies stand out: the guarantee interest rate adjustment for life insurance to address low interest rates, and the alignment of filing and actual expenses to improve transparency and market discipline. These reforms balance stability and innovation, laying the groundwork for a customer-centric insurance ecosystem.

Ping An stands apart with competitive advantages: our business model, scale, distribution channel, and technology. Our integrated finance plus healthcare plus senior care model creates a closed-loop ecosystem, leading to stickier customer relationships and higher lifetime value. We have unmatched scale with 240 million retail customers, covering nearly one in six people in China, with over 120 million high-potential customers aged 13 to 45. This is high and valuable scale.

Ping An has multi-channel distribution with China's largest agent force of over 60,000 and nationwide branches, plus top-tier digital platforms. This hybrid approach drives market penetration and cost efficiency. Technology is our secret weapon: AI-driven risk management, operating automation, and big data enable hyper-personalization, precise underwriting, and industry-leading profitability.

We activate technology advantages through our 'insurance plus services' strategy. By leveraging behavior insights from 240 million customers, we identify unmapped needs and deploy our ecosystem to deliver tailormade combinations of insurance plus services like healthcare. This transforms us from a policy provider to a lifelong partner, locking in loyalty and margins.

AI has become a game-changer in risk management. In 2024, our P&C smart anti-fraud system prevented potential losses of nearly 12 billion yen, a 10% improvement from 2023. AI systems enhance underwriting accuracy, reduce false claims, and improve pricing through continuous learning. This creates a transparent ecosystem, rewarding honest policyholders with accurate pricing and faster claims, aligning business success with customer value.

Three years ago, we transformed our sales force with an AI-empowered ecosystem covering recruitment, training, and performance enhancement. By analyzing data from top performers, we identified that EQ, attitude, and social intelligence are key success factors. AI persona models screen candidates, and AI interviews assess competencies. This has led to 13 quarters of double-digit growth in agent productivity. AI-powered training includes digital agents for hyper-realistic simulations and personalized learning paths, resulting in 50% faster onboarding. For example, AI tools helped agents quickly acquire knowledge about new participating insurance products. Our intelligent assistant, AskBob, offers task management, smart Q&A, and coaching, handling over 13 million inquiries per month and serving 95% of agents. Our smart CRM anticipates customer needs, providing marketing materials and enhancing sales efficiency. We focus on creating AI-enabled super agents, not replacing humans.

This integration is a core competitive advantage driving real business results. Last year, live and health new business value grew 29% year-on-year, with nearly 80% of new policy customers opting into healthcare and senior care services. Customers using integrated services have AUM nearly four times higher. This transforms relationships from transactional to long-term partnerships. By meeting needs through our ecosystem, we become partners in health and retirement, creating a flywheel effect of better services, more engaged customers, and higher policy uptake.

Technology is the engine. We created a healthcare ecosystem where customers using wearables earn rewards like premium discounts. AI analyzes health data for personalized wellness programs. With 240 million customers, nearly half under 45, our AI identifies patterns to develop dynamic pricing models and effective wellness incentives. We identify when banking customers might be ready for insurance products through healthcare programs. This increases engagement and lifetime value.

Risk mitigation services go beyond insurance by reducing risk likelihood and costs. We developed Eagle Eye, a digital risk system for early disaster alerts.

There are strict firewalls between business units on sharing customer data, and consent is obtained. Collaboration between legal, technology, and sales teams ensures compliance. The regulator is improving data protection laws, and we are confident our practices are future-proof.

Our roadmap centers on disciplined, high-impact technology deployment. We prioritize three dimensions: scalability in high-volume areas like anti-fraud and claims; value creation through clear revenue growth or competitive advantages; and operational efficiency in human-capital intensive processes. For example, our operating cost increased only 80% while revenue increased 800% due to technology. We turn our ecosystem into a competitive lab, pressure-testing innovations at scale before rolling out. We focus on prudent capital allocation on high ROI use cases, continuous scaling of proven solutions, and strategic deployment of data sets to create self-reinforcing advantages.