Waterdrop to boost health coverage for underserved areas
Tencent Holdings-backed online insurance technology firm Waterdrop, which raised US$360 million from its initial public offering in New York last week, plans to sharpen its focus on providing health policy coverage to the underserved population in the mainland’s small cities and rural areas, according to company founder Shen Peng.
Shen, who also serves as Waterdrop’s chief executive, told the South China Morning Post in an interview in Beijing that the company was “digging into demand [for health insurance policies]” in the mainland’s low-tier cities and rural areas, where consumers preferred low-premium coverage.
It is an initiative comparable to the strategy of e-commerce giant Pinduduo, which had 788.4 million annual active buyers in 2020 on the back of online retail sales growth in small cities and towns across the mainland.
“It’s a pretty good analogy of our business,” Shen said, referring to Pinduoduo.
“In a major Chinese city, a typical insurance policy buyer may pay premium on an annual basis or make one payment for a couple of years,” he said. “But in China’s third- or fourth-tier cities, a typical consumer may prefer a monthly premium payment.”
Waterdrop, with a market capitalisation at about US$4.5 billion, saw its shares tumble nearly 20 per cent on its trading debut at the New York Stock Exchange on Friday. The company’s share price closed at US$9.70 that day, below its US$12 IPO price.
Backed by both internet giant Tencent and on-demand services market leader Meituan, Waterdrop’s business strategy reflects how the vast rural online population is now big enough to drive growth for internet companies, compared with heated competition and slower growth in first-tier cities such as Beijing, Shanghai and Shenzhen.
[Consumers in rural cities] may prefer a monthly premium payment
SHEN PENG, WATERDROP FOUNDER
Waterdrop was initially set up in 2016 as an online crowdfunding and mutual aid platform for medical expenses.
Its availability through Tencent’s ubiquitous super app WeChat, which had more than 1.2 billion monthly active users in the fourth quarter last year, helped the platform gain quick recognition and popularity.
Waterdrop’s growth push, however, could take more time.
The company has not made any profit in the past three years, according to its IPO prospectus. It recorded annual losses of 247 million yuan (HK$299.2 million) in 2020, 159 million yuan in 2019 and 140 million yuan in 2018.