A few days ago, Waterdrop Company released its third quarter financial report. Net revenue in the third quarter was RMB779.3 million and operating loss was RMB513 million, down 37.1% sequentially; Premium Income for the first year of the first three quarters of Shui di Insurance was RMB14.464 billion, exceeding the total for the whole year of 2020, an increase of 37.5% year-on-year; sales and marketing expenses in the third quarter decreased by 37.2% quarter-on-quarter, and total operating costs and expenses fell by 26.4% quarter-on-quarter.
Three 37%, only five years old water drop companies are experiencing the pain of transformation from extensive growth to high-quality development. Although under the impetus of the adjustment of refined management, the data indicators of the third quarter financial report have gradually become colored, but in the face of the industry's growth adjustment, the water droplets that have not long entered the "dangerous" road are also "entering the circle of ten thousand mountains, and a mountain is letting go of a mountain".
The first year of premium income in the first three quarters was 14.464 billion yuan, exceeding the total for the whole year of 2020 and increasing by 37.5% year-on-year;
The cumulative number of service insurance users is 108.7 million, and the cumulative number of paid insurance users is 27.2 million;
In the third quarter, the first-year premium of a single customer increased to $1,292, an increase of 17.1% year-on-year.
In the third quarter financial report, these three sets of data of Waterdrop Insurance are extremely eye-catching.
In the first three quarters, the insurance industry's premium income was 3.65 trillion yuan, down 1.29% year-on-year. The only health insurance premium income that achieved positive growth also increased only slightly by 1.21%.
Under the general trend of slowing down the growth rate of the entire industry, the first year of premium income of Waterdrop Insurance against the trend reflects its operational resilience based on the huge customer scale, and its ability to tap the value and deep development of existing customers is rapidly improving.
From the huge customer scale to the strong premium scale, there is a solid premium growth rate between a natural barrier of conversion and realization - this is also the pain point and blockage of many Internet insurance platforms.
How does the water droplet break the game? Its strategy is to return to user value, playing from the user's vertical life cycle risk prevention, horizontal family category protection planning two dimensions, its portrait and demand analysis, with the help of online operation scenarios and enterprise WeChat empowerment online service team, as well as offline broker team professional services, to provide users with more malleable and dynamic comprehensive security solutions, enhance the comprehensive value of customers.
While continuously enriching customer portraits, we work closely with insurance companies and medical service institutions to provide a powerful engine for Waterdrop to enhance product innovation and customization capabilities, improve product attractiveness and premium growth.
As of September 30, 2021, the Waterdrop Insurance Platform offers 323 insurance products with an ever-expanding supply capacity, of which more than 90% of the first-year premiums are contributed by exclusive customized insurance products.
Among them, the first-year premiums of critical illness insurance products in the third quarter increased by 71% year-on-year, continuing the strong growth and product structure optimization since the beginning of the year.
While improving product innovation and customization capabilities, Waterdrop also works professional service capabilities, deeply lays out offline brokerage business, releases new basic laws, breaks the traditional pyramid structure of the insurance industry, and supports the four major empowerment systems of digital empowerment system, product empowerment system, training empowerment system, and marketing empowerment system, and strives to build a professional, professional and digital broker team to improve customer trust and satisfaction.
The repurchase rate is a key indicator of customer loyalty and a key factor in the steady growth of premiums. With the continuous improvement of product and service capabilities, the repurchase rate of water drop products has also increased simultaneously, especially the proportion of repurchase of serious illness insurance has further increased. The same-day and 35-day repurchase of short-term insurance in the third quarter increased by more than 30% compared with the second quarter; on a monthly basis, the 35-day repurchase rate has always remained at about 33%. The three-year repurchase + renewal rate by customer statistics increased by 10 percentage points from the previous quarter. Long-term LTV (Total Lifetime Value) increased 15% q-qo to 40% quarter-on-quarter.
Yang Guang, co-founder of Waterdrop and general manager of the insurance protection business group, said frankly: "Compared with the previous stage, we now pay more attention to building high-quality service capabilities and improving the user experience with better services. ”
Customer-oriented service innovation is also a breakthrough strategy for insurance companies. As an insurance and health service technology platform that has just entered the insurance path, how to create a distinctive water drop service in the red sea of service innovation, I am afraid that there is a long way to go.
In the third quarter of 2021, the total operating costs and expenses of Waterdrop Company were 1.292 billion yuan, down 26.4% from the previous quarter. Among them, sales and marketing expenses were 781.7 million yuan, a sharp decrease of 37.2% from 1,244.9 million yuan in the second quarter.
This set of data has become another highlight of Waterdrop's third-quarter financial report, indicating that Waterdrop is implementing effective cost control and striving to achieve the goal of improving profit margins.
The Goldman Sachs analysis report notes that with Waterdrop's grip on sales and marketing expenses, companies are expected to seek to break even off their mature businesses by 2023.
As for the reasons for the significant reduction in sales and marketing expenses, The Waterdrop financial report said that this is mainly due to the reduction of marketing expenses for third-party traffic channels by 460.4 million yuan under the company's cost control plan, and the budget for expenses is more stringent.
In recent years, with the changes in the internal and external environment, the dependence on third-party traffic channels has become an unbearable burden for small and medium-sized insurance companies and Internet insurance. For the water droplets whose own traffic dividends are declining, relying on third-party traffic channels to drain and realize has also become a growth path that has to be taken.
Shi Kangping, Chief Financial Officer of Waterdrop, said: "With the optimization and upgrading of the sales model, the growth of premium scale has slowed down, but through more refined operation management, we have successfully reduced our dependence on third-party traffic, and the net loss has been significantly reduced by 27.3% compared with the second quarter. ”
The Morgan Stanley Research Report pointed out that as the focus of water drops shifts from quantity to quality and strictly controls costs, profitability in the fourth quarter may further improve.
While reducing the cost with fine management, Waterdrop is also creating a second growth curve with open source on an open platform, and strives to get rid of traffic dependence.
The open platform of Waterdrop Insurance has been upgraded to 2.0, which is open to medical institutions, health management institutions and other third-party institutions while docking insurance companies, providing all-round support for marketing, operation, service, data, etc., and jointly building a health insurance protection ecology. Since the beginning of this year, more than 150 new service partners have been added to the open platform.
Launched the "OTO Broker" service to integrate and empower its own online customer operation capabilities with the offline service capabilities of traditional institutions to achieve win-win collaboration.
Through the opening of the platform and the creation of a healthy ecosystem, Waterdrop improves the customer service experience and broadens the service margin with professional and scenario-based services, thereby improving customer conversion ability and customer stickiness, and realizing the double growth of premium scale and user scale.
At this point, the water droplet seems to have run through the second curve growth logic. However, in the face of the weak economic growth in the post-epidemic era, the continued pain of industry transformation, and the increasingly personalized and complex internal and external environment of customer needs, Waterdrop still has to verify the logic of steadyly increasing premium income and good profitability, which means that it still has to pass multiple passes.
R&D expenses for the third quarter of 2021 increased by 92.9% year-on-year to RMB102.9 million, compared to RMB53.3 million in the third quarter of 2020. This increase was primarily due to the continued expansion of R&D teams to improve their competitiveness in terms of technology.
According to statistics, since 2018, the cumulative R&D investment of Waterdrop Company has exceeded 800 million yuan, and the size of the R&D team has exceeded 600 people, and the R&D investment fund and team size have both ranked in the forefront of similar Internet insurance platforms.
Through the leading technology new infrastructure, Waterdrop has provided scientific and technological empowerment for a series of strategic measures such as online and offline channel integration, marketing conversion ability improvement, fast and efficient service experience, and open and multi-dimensional platform.
On the business side, the "intelligent lead matching" system combines GBDT traditional machine learning with DNN deep model network to improve the matching efficiency between service personnel and users, increase the efficiency of the platform by 20%-40%, and increase the premium of tens of millions in the third quarter.
On the claims side, the accuracy rate of the "intelligent claim system" that has been perfected and launched has reached more than 99.67%, the case processing time has been improved by 55.85%, which can save about 30% of manpower, and the effectiveness of the case review is as low as about 5 minutes.
On the ecological side, the independently developed CONF medical knowledge map has covered 99% of the diagnostic database, the medical security directory database and more than 98% of all kinds of hospitals and appraisal institutions in the country, carried out name normalization processing, and formed 30 million + unified coded standard data, which is not only used in business scenarios such as patient recruitment, fundraising review, intelligent underwriting, insurance claims, etc., but also becomes an infrastructure to improve the quality of intelligent consultation, special drug recommendation and other services.
Shuidi has also built a SaaS open platform to empower insurance companies, exporting professional capabilities such as underwriting claims, user operation, risk management, product customization, actuarial pricing, and assisting reinsurance arrangements, empowering the entire insurance industry chain.
This is a win-win move - through the open platform, Waterdrop and Baoshi carry out in-depth cooperation in system construction, which can be more deeply integrated into the insurance business chain than the traditional intermediary model, thereby enhancing the resource management ability of the service insurance department and obtaining more customer contact and business awareness. At the same time, by assisting the insurance company to make claims decisions, it has also led to the accumulation of risk identification capabilities and relevant data in the water drop system.
Taking Baosi's ability to provide customer operation projects as an example, the cooperation model aims to carry out customized demand analysis and mining for the operation scenarios of Baosi's own original customers by exporting the online operation capabilities of water droplets on the C-end, thereby improving the life cycle value of Baosi's existing users. This service process also further enriches the customer acquisition scenario for water drops and gradually penetrates into the user groups of the industry stock market.
Powerful new technology infrastructure and open platform have made Waterdrop evolve from "traffic platform" to "service platform" and "technology platform", which has become a strong support for its vision of "science and technology for good".
In the third quarter of 2021, Waterdrop Insurance Brokers has participated in the inclusive insurance business of Beijing Puhui Health Insurance, Zibo Qi Huibao, Dezhou Huimin Insurance and other places, actively exploring new ways to serve users, and as of November 2021, the cumulative number of insured users is nearly 5 million.
Shen Peng, founder, chairman and CEO of Waterdrop, said that Waterdrop will seize the opportunity to actively use technology to link partners from all walks of life, and help the third distribution and common prosperity through diversified business combinations such as Waterdrop Chip, Waterdrop Insurance, and Waterdrop Medical, and promote the deep integration of digital technology and health security industry.
In five years, it has stood out in the fiercely competitive Internet insurance market, evolving from a traffic platform to an ecological organization and technology platform, and Waterdrop Company can be described as growing rapidly.
Competition in the business world is very similar to that in the biological world, and there are intraspecific, interspecific, and environmental competitions.
The winning factors of intraspecific competition are efficiency, wolf mentality, and close attention to opponents; the winning factors of interspecies competition are the ability to differentiate, openness of mentality, and focus on new living space; the winning factors of environmental competition are the ability to establish connections, maintain restraint, and actively participate in the construction of ecosystems.
From this logic, the water drop company has risen from intraspecific competition to interspecific and environmental competition.
In this new dimension, there are not only large-scale insurance companies with a volume of trillions of yuan leading the ecological construction, but also cutting-edge insurance companies that have laid out the health care ecology and technology platform very early. In the ecology of strong hands, how can water droplets find their own positioning and how to take the road of science and technology?
The answer may lie in the ever-changing evolution of water droplets.