Chinese insurtech startup nets $155m to catch up with newly listed Waterdrop

Beijing-based online insurance broker Yuanbao has raised nearly 1 billion yuan (US$155 million) in its series C round, according to an announcement on its official WeChat account on Monday. The fundraise was led by Source Code Capital and joined by existing investors Cathay Capital and Hike Capital, plus Susquehanna International Group.

The news comes shortly after competitor Waterdrop raised US$360 million in its initial  public offering on the New York Stock Exchange last week.

Photo credit: Phonlawat Chaicheevinlikit / 123RF

Yuanbao, which only launched last year with a national insurance brokerage license, has drawn millions of paying users by offering products from insurers such as Taikang and Huatai, according to the WeChat post. Waterdrop, which started its insurance marketplace Shuidibao in 2017, had a total of 19.2 million paying users at the end of last year, according to its IPO prospectus.

Yuanbao was established by Fang Rui, who built the online payment and ecommerce business at NetEase, where he was a vice president. Yuanbao features a “smart insurance brain” thhat matches buyers with suitable products. Like its peers, the company mostly focuses on the sales process rather than product design or the settling of claims.

The Chinese life and health insurance market is expected to reach 6.1 trillion yuan (US$949 billion) in total premiums by 2024, with a compound annualized growth rate of 14.5%, stated Waterdrop in its IPO prospectus, citing an iResearch report. Online marketplaces will account for 9.7% of the total sales in three years, up from 6% in 2019.

The speed with which the sector is progressing is leaving some people behind. “The online insurance sector is developing much faster than individuals can acquire financial knowledge,” said Duan Li, a Guangzhou-based insurance broker, who also runs a WeChat account that covers the sector’s pitfalls. “The laggards, especially the elderly, can easily fall victim,” she said.

This report was first published on KrAsia.