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It is reported that China Insurance Regulatory Commission has approved the establishment of an online insurance company initiated by Alibaba, Tencent and Ping An, one of the biggest insurance companies in China. In last August, Ma Zheming, board chairman and CEO of Ping An Insurance (Group) Co., confirmed that they were working with the two Internet giants on building such a business. The company, named Zhong An Online Property Insurance, is headquartered in Shanghai.

Alibaba holds a 19.9% stake and the other two big shareholders take 15% each, according to media reports. Other participants include Ctrip, with 5% stake, and another five tech or investment companies.

The company isn’t for selling existing insurance policies online, but for creating new insurance policies tailored to online economy, covering virtual property, e-commerce, social networking and other online activities. Virtual property gained from online games will also be covered, according to Ma Zheming.

The company is estimated to be led by an executive from Huatai Insurance, who is known for creating and managing the online retail policy for covering the delivery charges on goods returned by partnering with and applied on Taobao. Thus it is expected Zhong An Online is going to come up with broader liability coverage for online retail.

It is predicted that both Tencent and Alibaba will channel Internet users and e-commerce retailers to the service. Ping An is expected to offer expertise in insurance and after service.

Ping An, starting with insurance and having become a full-fledged financial group, is one of the few conventional financial companies in China that developed a variety of Internet services. Ping An One, a financial account management service launched in 2009, was one of the first of this kind in China. Lufax, an online peer-to-peer funding platform, was launched in March 2012 to finance small businesses. In the past January, Ping An signed a joint business plan with Baidu on data exploration. Ping An auto insurance set up an official WeChat account to speed up the process of claims.

Ma Mingzhe once said that the strongest competitors of theirs in the future wouldn’t be companies from conventional financial business world but from modern tech industry. He projected that tech companies could quickly grab their market shares so long as government regulators allow for it, disrupting and even destroying the conventional financial market. Tencent and Alibaba apparently the best partners, with huge user bases and data.

Chinese Internet companies, actually, including the two giants, have entered insurance industry. A variety of Internet companies started selling existing insurance policies online in cooperation with conventional insurance companies. You can also purchase insurance products on Alibaba’s Taobao.

Alibaba has expanded into financial realm with payments services and, more recently, loan programs along the way of building its e-commerce platform. As Jack Ma, founder of Alibaba, put it, they did what Chinese banks were asked to do but failed in in the past ten year. The company came up with creative financial solutions to improve the transaction process and make the platform a better place for online shopping. The policy for delivery charges on goods returned Taobao launched together with Huatai Insurance is another effort to make the online commerce realm a better served virtual world.