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Insurtech startup Yuanbao scores USD 155 million to catch up with newly listed Waterdrop

Written by Song Jingli Published on     2 mins read

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In 2024, online marketplaces will account for 9.7% of total sales in life and health insurance in China, according to a study.

Beijing-based online insurance broker Yuanbao has raised nearly RMB 1 billion (USD 155 million) in its Series C round led by Source Code Capital and joined by existing investors Cathay Capital, Hike Capital, as well as Susquehanna International Group and Northern Light Venture Capital, the company announced on its official WeChat account on Monday. The news comes shortly after competitor Waterdrop (NYSE: WDH) raised USD 360 million in its IPO on the New York Stock Exchange on Friday.

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.

Founded by Fang Rui, who at the time built the online payment and e-commerce business at NetEase, where he was a vice president, Yuanbao features a “smart insurance brain” which 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 RMB 6.1 trillion (USD 949 billion) in total premiums by 2024 with a compound annualized growth rate of 14.5%, Waterdrop stated 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.

(Northern Light Venture Capital was also an investor and has been added in the first paragraph.)

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