Good News on Listing | Frost & Sullivan Assists Zhibao Technology Co., Ltd. in Successfully Going Public in the US (ZBAO.US)

Zhibao Technology Co., Ltd. (hereinafter referred to as 'Zhibao Technology') successfully went public on April 3, 2024. The company's IPO issued 1.5 million common shares at a public offering price of $4 per share, raising a total initial public offering capital of $6 million.

During the process of listing in the US, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the SEC and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing various feedbacks from the SEC regarding industry issues.

The company is a leading insurance technology enterprise;

The company continues to build influential innovation platforms and lead industry development;

The company has a profound accumulation of insurance technology expertise and industry-leading operational capabilities for scenario-based solutions;

The company has strategic collaborative B-side industry partners with high mutual trust, which drive the development of C-side businesses;

The company has a management team that shares a common mission and is highly visionary.

According to the Frost & Sullivan report, in terms of operating revenue for 2022, the company:

Ranked first among China's B2B2C insurance brokerage service providers;

Ranked second among MGU service providers in China;

The compound annual growth rate of China's 2B2C insurance brokerage service industry and MGU service industry is expected to remain above 30% in the coming years, indicating broad market prospects.

Insurance brokerage services refer to the provision of professional risk management, insurance plan design, contract signing, compensation settlement assistance, and other services approved by Chinese insurance regulatory authorities to clients. With the development of the domestic insurance industry and the progress of digital industrial transformation, insurance brokerage service institutions have gained increasing recognition from policyholders and insurance companies. According to a Frost & Sullivan report, the market size of insurance brokerage services has shown stable growth from 19.8 billion yuan in 2018 to 42.7 billion yuan in 2022, with a compound annual growth rate of 21.1%.

According to a Frost & Sullivan report, compared to the traditional insurance brokerage service industry, the digital insurance brokerage service industry has grown at a faster pace, increasing from about 2.2 billion yuan in 2018 to about 8.4 billion yuan in 2022, with a compound annual growth rate of 39.2%. The integration of digital technology and changes in consumer preferences in the insurance industry have brought competitive advantages to digital insurance brokerage service providers. Digital technology helps enterprises connect with customers through more channels and improve operational efficiency. It is expected that the digital insurance brokerage service industry will continue to grow to about 527 billion yuan by 2027.

Digital scenario embedded (2B2C) insurance brokerage services represent an innovative business model that provides integrated insurance solutions ranging from operations, technical systems to insurance products for various business entity channels such as companies or government departments (2B), thereby indirectly offering insurance products and customer services to end customers (2C). The insurance solutions provided by 2B2C insurance brokerage services are tailored to specific scenarios and the industries or characteristics of each business entity channel. These solutions include various types of insurance products, positioned according to the needs of different end customers. Through this model, 2B2C insurance brokerage service providers and business entity channels jointly offer digital insurance brokerage services to end customers (2C).

According to a Frost & Sullivan report, the market size of embedded insurance brokerage services in digital scenarios in China has grown from about 100 million yuan in 2018 to about 800 million yuan in 2022, with a compound annual growth rate of 54.6% from 2018 to 2022. Driven by several factors, such as supportive government policies, continuous development of insurance technology, and changes in consumer behavior, it is expected that by 2027, the market size of embedded insurance brokerage services in digital scenarios in China will reach about 620 million yuan, with a compound annual growth rate of about 50.1% from 2022 to 2027.

The Management General Underwriter (‘MGU’) service is one of the models that can be integrated with the 2B2C insurance brokerage model and provided as an extended service. MGU service providers refer to insurance intermediaries specializing in specific market segments, such as mid-to-high-end medical insurance services, and use advanced insurance technology to manage and underwrite insurance on behalf of insurance companies. MGU service providers handle tasks such as assessing and determining whether insurance risks can be borne by the insurance company, as well as performing administrative functions such as marketing, product design, claims settlement, account reconciliation, and risk control for the insurance company. They may also distribute products to digital brokerage service providers after configuring them for sale. Insurance companies pay service fees to MGU services to reduce their product development and operational costs and expand their sales channels. Due to limited channel-building capabilities, small and medium-sized insurance companies may choose MGU services to assist them with product sales, distribution, and operations.

Overall, management general agents (MGUs), third-party administrators ("TPAs"), insurance companies, and reinsurance companies cooperate to provide insurance coverage. However, unlike TPAs that mainly handle administrative tasks, MGUs specialize in supporting insurance companies in underwriting and managing insurance policies, often collaborating with insurance and reinsurance companies to provide coverage for specific risks and industries based on their expertise. MGUs are authorized to hold some underwriting authority for insurance companies and can sign insurance contracts on behalf of them. Some leading 2B2C insurance brokerage companies have the capability to serve as both insurance brokerage service providers and MGU service providers. By incorporating the MGU model into their operations, these companies can offer more comprehensive service packages and integrated solutions for insurance companies and end customers. Currently, the mid-to-high-end medical insurance segment is the most mature sub-segment market for MGUs in China. Looking ahead, the MGU business model may overlap, integrate with, and cooperate with the 2B2C business model to provide standardized and customizable insurance solutions for other industries, enterprises, and government entities. China's MGU service market is still in its infancy, and the government is taking measures to promote its development, establish regulation, and rectify the fragmented and chaotic market structure.

According to a Frost & Sullivan report, the China management general agency service market has witnessed significant growth, increasing from 2018's RMB 200 million to approximately RMB 500 million in 2022, with a compound annual growth rate of 21.9% during this period. With the MGU service market becoming more mature and new models developing, it is expected that the MGU service market will become replicable and scalable. It is estimated that the market size will reach approximately RMB 180 billion in 2027, with a compound annual growth rate of about 30.2% from 2022 to 2027.

• Policy stimulus

In 2021, the Insurance Industry Association of China issued a notice on the 'Insurance Technology & 14th Five-Year Plan Development (Draft for Soliciting Opinions)'. The notice sets a goal of achieving a digitalization rate of over 90% for insurance services by 2025, prompting traditional insurance brokerage service companies to shift towards a digital business model, thereby expanding the digital insurance brokerage service industry. In addition, the 'Healthy China 2030' plan aims to strengthen the multi-level medical security system by enhancing basic medical insurance and supplementing various types of supplementary insurance and commercial health insurance. The goal of the plan is to establish a mature universal medical insurance system by 2030 and improve the management and service efficiency of universal medical insurance.

• Technological progress

Emerging technologies such as artificial intelligence, big data, cloud computing, the Internet of Things, and blockchain have driven the development of the digital insurance industry. Insurance technology can improve efficiency and reduce costs by promoting scenario-based insurance, product customization, service optimization, underwriting processes, and instant claims settlement. For example, cloud computing services can help save operating costs. In addition, AI-powered digital brokerage platforms can increase efficiency and reduce the cost of labor-intensive insurance operations. Insurance technology also helps insurance companies and B2B2C insurance brokerage service providers reach a wider customer base.

• Customer changes

In recent years, customer behavior has undergone profound changes. Research shows that insurance customers in the internet era are more concerned about product transparency and service experience, and they have a strong preference for personalization, customization, and scenario-oriented offerings. In addition, the millennial generation is gradually becoming the main consumer group for insurance. They usually trust the internet more, prefer the convenience of online information access, and place great importance on product diversity and customization. These changes in customer behavior and composition have enhanced the growth prospects of digital scenario embedded insurance brokerage services.

• Unique business model

The company is committed to establishing a sustainable insurance business and service model for enterprises and end customers (B2C), focusing on building a high-quality service platform that covers a wide range of scenarios and can meet various customer needs for the long term. The B2C model not only supports digital brokerage services but can also be integrated with innovative businesses such as MGU and TPA. By providing customized insurance products, technical support, underwriting assistance, policy management services, and claims assistance, the company has created a closed-loop service that covers the entire insurance transaction process, simplifying the original complex procedures and providing a better customer experience for both enterprise (B-side) and individual (C-side) customers.

• Strong technical capabilities

The company has developed a set of technology platforms equipped with unique and necessary components to meet various business needs in the digital insurance brokerage service domain. The company's Platform as a Service (PAAS) technology enables rapid, professional, and flexible development of 2B2C scenario-based insurance solutions for commercial entities including companies and governments. In addition, the company provides customer insights and digital user operation analysis tools, improving operational efficiency and increasing customer lifetime value. The company's data analytics tools also help its commercial entity channels improve their management efficiency.

• A huge customer base

The company's business entity channels include entities or institutions from various fields such as internet platforms, government departments, large and medium-sized enterprises, etc. The company's platform currently offers over 40 solutions covering the main B-side scenarios. The company can effectively acquire C-side customers because they are already clients of the company's business entity channels. At the same time, the company leverages its digital operations and service capabilities to assist business entity channels in continuously and efficiently meeting the insurance needs of C-side customers. In addition, the company also uses its accumulated C-side traffic pool to analyze customer needs and conduct precise marketing, thereby achieving secondary or multiple customer conversions.