Feb 19, 2021

Waterdrop set for IPO after multi-billion dollar evaluations

Joanna England
2 min
Waterdrop set for IPO after multi-billion dollar evaluations
Waterdrop's initial public offering could be made as soon as next quarter after a recent valuation showing the company's impressive worth...

Waterdrop, the Chinese insutech platform that aims to solve the high medical fees faced by patients, is reportedly in full preparation for a US IPO in the next few weeks.

The company, which was founded in 2016, offers three products; namely crowdfunding, commercial insurance and mutual insurance. Waterdrop also spe cialises in cover for patients with a critical illness.

The online technology platform which is headquartered in Beijing and backed by Tencent, operates through the platform's official WeChat account. Users can post crowdfunding campaigns, buy insurances, or claim indemnities according to their policies.

Crowdfunded health cover

Waterdrop was one of the first crowdfunded medical aid platforms to emerge, with the service first becoming popular in 2016. Reports suggest the company has recruited 40 million users and provided an estimated CNY 100m in medical aid to thousands of users diagnosed with a serious illness. The service is mainly popular with the younger generation as well as residents of third or fourth-tier Chinese cities.

Central segments of Waterdrop include the charity crowdfund platform Shuidichou, mutual and Shuidihuzhu, a commercial insurance product. Waterdrop also has the community and premium trial calculation platform, Shuidi Insurance Mall.

Waterdrop backers

The insurtech has undergone several funding rounds so far, the most recent of which - a Series D in August 2020 - raised an astonishing $230m in investments.

 “We are excited about the huge growth potential that lies ahead of us. Our long-term goal is to become a leading online healthcare platform in China with an ecosystem that includes insurers, pharmaceutical companies, hospitals and drug stores, as well as nursing institutions and rehabilitation institutions,” Peng Shen, founder and CEO of Waterdrop, said at the time. “We are committed t o not only helping users with financing issues but also providing them with integrated healthcare services along the way.” 

According to reports, Tencent led Series D round, followed closely by other investors that included Gaorong Capital, IDG Capital and Lighting Global. Collectively, Waterdrop has raised an estimated CNY 3.2bn through funding rounds.

Waterdrop valuation

In July 2020, news reports announced that Waterdrop's initial public offering in the US was already well underway and that the listing would be completed by December. At that time, the IPO was valued at between $4bn and $6bn.

The company has grown at an incredible rate, and experts believe Waterdrop could have increased its worth 200-fold over the past five years, as a valuation in 2016 following financing from angel investors, set the bar at CNY 300m.

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Jun 19, 2021

Insurtechs are winning the race with legacy system companies

Tom Allen, Founder, The AI Jou...
3 min
Insurance has long been due an overhaul. The AI Journal’s founder Tom Allen explains how innovative insurtechs are changing the incumbent narative

Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.

That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.

The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector. 

What exactly is insurtech?

Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.

Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.

The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.

Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.

More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.

Insurtechs and risk

But there are some obstacles in the way of insurtech’s continued evolution.

Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.

Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?

There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.

While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.

Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal

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