After a reckless period, the pace of IPOs of Internet insurance brokerage companies has accelerated significantly. Since 2020, Huize, Tianruixiang, and Shuidi have successively entered the capital market, and in September last year, Cheche Technology also successfully entered the U.S. stock market through SPAC. Recently, Youjia Insurance and Zhibao Technology were successfully listed on the NASDAQ in the United States within a week, which attracted the attention of the industry.
Looking back at the IPO journey of insurance intermediaries, none of them have been smooth sailing. Although the number of intermediaries that have been listed and are waiting to be listed has increased, the current market performance can only be said to be unsatisfactory, and it cannot alleviate the more serious anxiety about survival and development in the intermediary industry recently.
For a long time, the model of insurance intermediaries as a sales channel to earn commissions has become more and more thin, and with the support of technology, new talents and other factors, the business model and role positioning of insurance intermediaries are undergoing iteration and transformation. In this process, it also exposes some common and urgent problems of Internet insurance brokers and even the entire intermediary industry.
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Listed insurance companies have added two new faces,
Is there a listing boom in the field of insurance intermediaries?
Youjia Insurance and Zhibao Technology are both relatively young companies, although they are both Internet insurance intermediaries, but there are still some differences in the company's business model and main business.
Founded in 2018 and headquartered in Beijing, Youjia Insurance mainly focuses on providing value-added services to customers through artificial intelligence and other technologies to help customers increase their visibility, grasp consumer behavior, reduce customer acquisition costs, and optimize efficiency. From the perspective of the company's main business, it can be divided into three parts: digital promotion services, risk assessment services, and value-added bundled services. Taking digital promotion services as an example, as the main revenue force of Youjia Insurance, Youjia Insurance mainly enables customers to obtain traffic and increase visibility through third-party online platforms such as Kuaishou and WeChat, as well as offline marketing scenarios, and then obtains commissions according to the number of clicks in the channel and the promotion time.
In terms of listing, on March 28, an insurance company was successfully listed on the U.S. stock market, issuing a total of 2 million common shares at a price of $5.00 per share, and as of April 17, the total market value reached $132 million.
In terms of financial reports, the results of an insurance company are not top-notch in the industry. According to its prospectus, the revenue of Youjia Insurance in the past three years was about 520 million yuan, 621 million yuan and 679 million yuan respectively, and the net profit was -68,600 yuan, -354,200 yuan and 1.4886 million yuan respectively.
Although it successfully turned losses into profits in 2023, the company's debt-to-asset ratio has been at a high level, with 97% in 2021 and 96% in 2022. At the same time, Youjia Insurance has also encountered great pressure in terms of cash flow, with negative net cash provided by both operating activities and financing activities, and as of the end of 2022, the available cash flow on Youjia Insurance is only about US$1.32 million. Under the dual pressure of debt and cash flow, it can also be understood from a perspective why Youjia Insurance is so urgent to go public.
Founded in 2015 and headquartered in Shanghai, another listed company, Zhibao Technology, is represented by a one-stop customized insurance brokerage model, providing digital insurance solutions for B-end channels, embedding existing business matrix of channels, and providing digital insurance brokerage services for C-end customers of channels. In terms of the company's main business, it is mainly divided into two major sectors: digital insurance brokerage services and MGU services. Taking MGU service as an example, it mainly plays the role of general underwriting agent, helping insurance companies complete core business processes such as product design, underwriting, risk control, claims settlement, and reinsurance.
On April 2, Zhibao Technology was successfully listed on the U.S. stock market, issuing a total of 1.5 million common shares at a price of $4.00 per share, raising $6 million, with a total market value of $112 million as of April 17.
In terms of financial reports, its prospectus shows that in the past three years, the revenue of Zhibao Technology was 45 million yuan, 108 million yuan, and 142 million yuan respectively, and the net profit was -37 million yuan, 14 million yuan, and -43 million yuan. Similar to the situation of Youjia Insurance, Zhibao Technology has also experienced problems such as poor long-term cash flow and rising accounts receivable. On the one hand, it is because the profitability performance of Zhibao Technology is not stable, and it will lose 43 million yuan in 2023 alone. On the other hand, there was a decrease in related party receivables for corporate insurance claims and customer service.
The listing of an insurance company and Zhibao Technology may be the prelude to the small climax of the IPO of Internet insurance brokerage companies, and there are still companies in the queue such as Hengguang Insurance, Little Umbrella, Yuanxin Technology, Genesis Insurance, and Zhongmiao Science and Technology. It's just that at present, the pressure is still quite great to have a bright performance in the capital market.
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Heightened Challenges:
The Internet insurance brokerage industry urgently needs to find its core competitiveness
As mentioned at the beginning of the article, for today's insurance intermediaries, it is no longer the era of fighting fees as a sales channel, and it is necessary to transform if they want to break through a single commission income model, which is also one of the most anxious problems for companies at present.
We see that many leading insurance intermediaries in China are changing their development ideas, such as Huize is exploring online and offline integration, and is also carrying out long-term strategic layout on the channel side, product side and client side. Another example is that Shuidi has blossomed in offline service outlets, clinical trials, insurance technology research and development and other fields, and is actively looking for new business increments.
Although some insurance intermediaries are actively seeking transformation, most intermediaries are difficult to make breakthroughs in business refinement, service specialization, and technological innovation. At present, the entire insurance intermediary market is being cleared up and improved, but if you want to really make some changes, you still have to sort out the real dilemma faced by the current Internet insurance brokerage companies. ”
Problem 1: Insurance intermediaries are generally weak, and most of them only have the function of sales, and there are almost no "moats". Let's take the proportion of insurance business revenue of the four listed companies in 2023 as an example. Shuidi's insurance business income was 2.34 billion yuan, accounting for 88.93% of the total revenue, Pan-China's insurance business income was 2.76 billion yuan, accounting for 86.25% of the total revenue, Huize's insurance business income was 1.145 billion yuan, accounting for 95.73% of the total income, and Zhibao Technology's insurance business income was 45.6727 million yuan, accounting for 32.16% of the total income.
As can be seen from the figure above, the total revenue of Shuidi and Pan-China insurance business accounts for more than 85%, while Huize is more than 95%, while Zhibao Technology accounts for a relatively low proportion. This also shows that the revenue structure of the head insurance intermediary has not been diversified, and sales still account for the majority of revenue, and once it is affected by some impact, it will have a huge impact on the company's business performance.
Question 2: In the past, Internet insurance intermediaries were more innovative models and had strong homogeneity. Customer acquisition and sales are the eternal theme of the To C-end insurance business, and the main reason why Internet insurance can rise and receive widespread attention is that it has taken advantage of the east wind of the Internet to show a strong ability to acquire customers, which has brought at least phased rapid growth to many companies.
We've always emphasized the importance of traffic, and we still do. There's nothing wrong with that, after all, getting traffic is the key to closing a deal. But we also have to admit that this kind of innovation based on traffic and sales logic is more of a model innovation, and most of the Internet insurance traffic comes from third-party platforms, which means that the channels and models with a little bit of achievements will be quickly imitated by competitors, and the homogenization of the entire industry will quickly exhaust the market dividend.
For example, channels such as Baidu search, official accounts, Douyin and other channels that used to have traffic dividends were always quickly flooded by peers, and in the early days, many salesmen or intermediaries were indeed able to achieve rapid realization through the traffic of these third-party channels. But soon, the problems of homogeneous content, low quality, and high traffic costs appeared.
For example, if you search for the title "The Truth of Insurance That Deceived Hundreds of Millions of People" in the WeChat video account, you can find a lot of similar or even identical videos, including the copywriting of the video and the editing of the video.
When the market is so crowded that it reaches the level of irrational competition, even the best business model will not be able to hold up at first. With the continuous increase in traffic costs, some businesses have become loss-making profits. Perhaps, in the era of traffic reconstruction, the quality of traffic is more important than the quantity.
In addition to spending money and traffic, how can insurance intermediaries retain customers and create irreplaceable value for insurance companies? With the gradual refinement of the division of labor in the industrial chain, we will find more and more answers to this question. At present, "product power" is relatively more likely to become a weapon to support intermediary companies to form differentiated advantages.
Therefore, in recent years, we can see that Huize has continued to focus on customized products, and has successively cooperated with leading insurance companies such as Ping An and CPIC to launch a number of popular customized IP products, such as the well-known Darwin series and e-Protection, which have achieved good responses in the market. According to the relevant data disclosed in the financial reports of the past three years, the proportion of customized products in the total premium of Huize reached 61.2%, 64.8% and 61.6% respectively, exceeding 60% for three consecutive years. From the perspective of long-term development, Huize vigorously promotes customized products, which can enrich the company's product matrix on the one hand, and on the other hand, it can become a unique competitive barrier for Huize in the future.
Of course, this is just one of the cases, and each company still has to find the right direction of differentiation according to its own endowment.
Question 3: Under the influence of the policy of "integration of newspapers and banks", the entire insurance intermediary operation is facing relatively big challenges. On the one hand, under the influence of factors such as high turnover rate and rising marketing costs, the sales cost of insurance intermediaries has begun to gradually rise, and it is not easy for listed insurance intermediaries to maintain profits, let alone small and medium-sized insurance intermediaries. On the other hand, with the implementation of the "integration of newspapers and banks" in the intermediary industry, insurance intermediaries will also receive a big blow.
The impact of "newspaper and bank integration" on practitioners in the intermediary industry is huge. With the implementation of the "integration of newspapers and banks", the fee difference may be close to halving, and the agent commission will also be greatly reduced, so for the salesmen in the first and second-tier cities whose performance is not very stable, it may slowly fall off. Second, insurance intermediaries that have adopted high handling fees and flyer models in the past will be most directly affected by the "integration of newspapers and banks". The reason is that the products are too homogeneous, and the commission will not be much worse, then the insurance company may directly connect with the intermediary company or empower to narrow the middleman's point. In addition, because the intermediary companies with heavy asset deployment have a wide range of investment in assets, IT, back office, etc., the reduction in revenue brought about by the "integration of newspapers and banks" will inevitably bring cash flow pressure, prompting these intermediary companies to further reduce rigid costs.
All in all, for insurance intermediaries who make a living from sales, if they do not form a refined business model in the early stage, they are likely to fall in the cold winter.
The development of China's insurance intermediary industry has not been long, especially in contemporary times, and some people even have some doubts about whether "insurance intermediaries" can continue to exist.
Indeed, the entire insurance intermediary market is going through a period of adjustment, and the industry is facing a lot of instability, and insurance intermediaries, including Internet insurance brokerage companies, need to face up to the difficulties and find their core competitiveness to change their development ideas to achieve healthy and high-quality development. On the other hand, for insurance intermediaries that are impacting IPOs, if they want to be recognized by the market and investors, they not only blindly pursue short-term revenue, but also need to increase long-term investment in research and development and technological empowerment, and truly establish a moat in terms of products, technologies and services. It is hoped that more high-quality insurance intermediaries will be successfully listed in the future, injecting more vitality into the insurance intermediary industry.