Waterdrop to expand online health insurance, seek investor backing

Waterdrop Inc, a Chinese third-party online insurance broker, is set to expand its health insurance business.

The move is expected to help it to fend off rivals and gain an edge in the emerging fields of online healthcare insurance and healthcare crowdfunding.

The firm said it raised more than 1 billion yuan ($146 million) in a fresh round of financing to further expand its health insurance offerings online.

The Series C round of financing was led by Boyu Capital. Other backers included Tencent Holdings Ltd, CICC Capital and Gaorong Capital.

Shen Peng, founder and CEO of Waterdrop, said the money raised will be used to build a professional team focused on selling health insurance online and to develop artificial intelligence apps in health insurance.

"We will accelerate the push to grow the health insurance and the healthcare business with mutual aid products and services, to offer better user experiences," Shen said. "With the booming mobile internet and increasing popularity of mobile payments, we now are able to allow more users, especially those living outside the first - and second-tier cities in China, to enjoy good health insurance coverage.

"As major insurance companies mainly serve middle-and upper-income families in large cities, Waterdrop Inc aims to cater to those living in the third-, fourth- and fifth-tier cities as well as the younger generation born in the 1980s and 1990s."

Seeing the trend, Waterdrop has announced a brand upgrade strategy to work with more insurance companies, aiming to expand its insurance offerings.

So far, it has launched more than 80 health insurance products provided by over 60 third-party insurance companies. More than 12 million users have bought the insurance products on the Waterdrop insurance platform online, and the premiums exceeded 500 million yuan in May, the company claimed.

Among the 12 million users who bought Waterdrop insurance products, 90 percent said it was their first time to buy insurance online. And 73 percent are willing to buy Waterdrop insurance products once more, the company said.

Yang Guang, partner of the parent company and general manager of the online platform, said Waterdrop will connect consumers and insurance firms.

"On the one hand, we will use a series of internet operations to have a better understanding of users. On the other hand, we will accordingly customize the products and match the products to the most relevant audience with its recommendation algorithms," Yang said.

He said there is a huge room for growth in the current market. "China has around 800 million internet users, while only 220 million buy insurance online. It is important to expand the offerings that users actually need and provide better user experience that ensures all problems will be solved."

The booming internet technologies have brought together financial institutions, insurers, online insurance brokers and other related enterprises into a new insurance ecosystem, said Huang Kai, executive director of Boyu Capital.

"We are glad to see that the emerging internet-based insurance platforms such as Waterdrop Inc are helping transform people's spending habits in the field of health insurance," Huang said. "In recent years, commercial insurance has played a key role in the continuous improvement of the domestic social security system. And online insurance brokers are one of the key drivers that have produced a breakthrough via technological innovation.

"This fosters not only the innovation of the channels but the internet-based improvement of the entire service process."

Waterdrop is one of a number of Chinese online firms looking to tap the internet finance sector, which is already crowded and boasts big names such as Didi Chuxing, Ant Financial, and Meituan-Dianping.

Xue Hongyan, director of the Internet Finance Research Center, which is a part of the Suning Institute of Finance, highlighted the emerging wave of internet firms tapping into the sector, saying it is hard for traditional financial platforms to attract users to spend time on them.

"Actually, users would love to spend more time on popular mobile apps. And the cooperation of the internet firms and traditional financial companies will help optimize the allocation of their resources."