Lecheng Yunfu: Deep Integration of Health Insurance and Health Management under the 'Pharma-Health-Commerce-Insurance' Strategy

In recent years, integration with health management services has become one of the defining trends in the development of health insurance.

On the one hand, although the health insurance market is developing rapidly, claim payouts have remained at a high level. According to relevant articles from the Qianzhan Industry Research Institute, among insurance companies operating commercial health insurance in China, more than 80% reported an annual loss ratio exceeding 80%, and approximately 40% had a loss ratio exceeding 100%.

Moreover, impacted by the COVID-19 pandemic and the rise of city-specific supplementary medical insurance (Hui Min Bao), the growth rate of domestic health insurance premiums has faced short-term challenges. According to a report by Haitong Securities, the compound annual growth rate (CAGR) of health insurance premiums over the past five years was 28%, significantly outpacing that of life insurance and accident insurance. However, the year-on-year growth rate declined to 16% in 2020, marking a substantial drop compared to 24% in 2018 and 30% in 2019. The health insurance industry is in urgent need of identifying new drivers for business growth.

On the other hand, to alleviate the payment pressure on medical insurance funds and address the unequal distribution of health management service resources indirectly caused by the uneven allocation of medical resources, the state has continuously introduced corresponding policies in recent years to encourage the deep integration of health insurance with health management services.

In this context, health management services are regarded as the next growth engine for the health insurance industry, sparking a wave of exploration into the integration of “health insurance + health management.” Players across the spectrum—from pharmaceutical companies and insurers to insurtech firms and health management companies—have entered the fray. Some are leveraging technologies such as big data analytics to develop practical tools for underwriting, claims adjudication, and extended services in individual insurance; others are building in-house teams to create one-stop intelligent platforms that integrate “insurance coverage, medical services, and health management.”

Amidst the fervor, VCBeat identified a health insurance technology enterprise named Shenzhen Xiaobu Running Technology Co., Ltd. (hereinafter referred to as “Xiaobu Running”). While providing insurtech solutions to insurance companies, distribution channels, and agents, the company is also committed to promoting the deep integration of health insurance with health management services.

It is reported that,Anchored in the strategic development of “pharmaceuticals, healthcare, and commercial health insurance,” Xiaobu Running has built an innovative technology platform for this sector—LeCheng Cloud Services—and an innovative payment platform—LeYiTong. The former leverages digital technologies such as big data and artificial intelligence to provide insurers with “customized + curated” health insurance products, along with one-stop solutions for business expansion, policy conversion, and marketing promotion.

The latter collaborates with multiple third-party institutions to build a premium product repository encompassing innovative healthcare, pharmaceuticals, health management, and e-commerce offerings; establishes various digital analysis and application models; and leverages an intelligent middle platform to smartly match products from the repository with insurance coverage liabilities. This approach delivers digital insurance solutions that empower insurance institutions, regional populations, and enterprise clients, providing a suite of products that deeply integrate health services with insurance protection.

Holding an MBA from the Hong Kong University of Science and Technology, an EMBA from Cheung Kong Graduate School of Business, and having been an exchange student at Duke University in the United States, Xu Han, founder of Xiaobu Running, bears these labels: NBI AWARDS 2017 Rising Business Star, 2019 Rising Star in Insurance Intermediation, one of the Top Ten Influential Figures in the Internet Insurance Industry in 2021, and former Chairman of Xiaoyusan Insurance.

Regarding the serendipity of choosing his industry, Xu Han stated: “My decision to launch a venture in the insurance health technology sector can be traced back to 2015. At that time, I was highly optimistic about the development of fintech in China. Most financial product categories in China had already reached a relatively mature stage. Meanwhile, numerous successful internet insurance technology companies had emerged abroad, demonstrating the viability of their business models and growth trajectories. However, internet insurance in China was still in its early stages, holding immense potential for development.”

“Thus, Xu Han, who had already achieved success in Hong Kong’s financial, business, and sports sectors and was even nominated for the 2015 Top Ten Outstanding Young Persons of Hong Kong, forgone numerous opportunities and resolutely chose to explore this blue-ocean market through entrepreneurial ventures.”

Facts have proven that Xu Han’s initial judgment was highly accurate.

Overall, the health insurance sector still holds significant long-term growth potential, despite short-term challenges in market expansion. According to the China Banking and Insurance Regulatory Commission (CBIRC), the total annual premium volume of health insurance is projected to reach RMB 2 trillion by 2025, with a compound annual growth rate (CAGR) of 21% over the next five years.

From the perspective of internet health insurance, according to VCBeat’s “Global Internet Medical Insurance Value Trend Report (2015–2020),” the gross written premiums for internet health insurance grew from RMB 1.03 billion in 2015 to RMB 12.29 billion in 2018, representing an 11-fold increase over the three-year period.

Moreover, from 2015 to 2020, the internet medical insurance sector averaged more than 20 financing deals per year, peaking in 2018 with 24 deals and a total financing amount of $1.62 billion.

However,From Xu Han’s perspective, the revenue ceiling for pure internet insurance marketing operations is clearly defined:

As traffic acquisition costs continue to rise in the internet insurance industry, some of the inefficiencies inherent in offline operations have spilled over into online channels, failing to deliver the anticipated innovation and high value creation for the industry.

Therefore, in 2020, Xu Han resigned as Chairman of Xiaoyusan, readjusted his career trajectory, and founded Xiaobu Running (Lecheng Cloud Services).Although it remains an insurtech company, its corporate positioning and strategic development landscape are significantly different.

Regarding corporate positioning, Xu Han revealed that Xiaobu Running empowers B-side enterprises with its capabilities in product actuarial customization, brand marketing, and risk control technology.

andIn terms of development strategy, “At present, it is no longer highly meaningful to draw an absolute distinction between internet insurance and offline insurance, as some of the drawbacks inherent in offline insurance have also emerged in internet insurance after years of development.“Against this backdrop, we have formulated the strategic layout of ‘Pharmaceutical and Health Commercial Insurance’ by comprehensively considering the current needs and trends in industry development,” Xu Han revealed.

In the “Pharmaceuticals, Healthcare, and Insurance” strategy of Shenzhen Xiaobu Running Technology Group, insurance products constitute an indispensable component and serve as the foundational carrier for medical services, pharmaceutical care services, and health management services. Therefore, when analyzing the business layout of Shenzhen Xiaobu Running Technology Group, we begin with the “Insurance” segment, which highlights the “technology” attributes of Lecheng Cloud Services.

As previously mentioned, Xiaobu Running can provide technological solutions for insurance companies, insurance sales channels, and insurance agents. The implementation of these technological solutions relies on its innovative technology platform for pharmaceutical, health, and commercial insurance—LeCheng Cloud Services.

So, what specific services can Shenzhen Xiaobu Running Technology Group provide to insurance companies and agents, and what are its core advantages?

In this regard,Xu Han stated that, for insurance companies, Shenzhen Xiaobu Running Technology Group can leverage digital technologies such as big data and artificial intelligence to launch “customized + curated” insurance products, underpinned by its capabilities in risk control, actuarial science, and marketing, while providing a one-stop solution spanning product design, risk management, and marketing.

To date, Shenzhen Xiaobu Running Technology Group has collaborated with over 60 insurance companies to launch a variety of customized health insurance products. The successful introduction of multiple products aligned with market demand is primarily underpinned by Shenzhen Xiaobu Running Technology Group’s risk control and actuarial capabilities.

Talent reserves and data modeling capabilities are two key dimensions for assessing risk control and actuarial capabilities.

In terms of talent reserves, the actuarial team at Shenzhen Xiaobu Running Technology Group is led by co-founder and Chief Product Officer (CPO) Lu Tiantian. Reportedly, Mr. Lu holds a Master’s degree in Actuarial Science from the J. Mack Robinson College of Business at Georgia State University in the United States and possesses extensive experience in multi-channel actuarial practices and product marketing within the insurance industry.

In terms of model development, as Shenzhen Xiaobu Running Technology Group collaborates with insurance companies to launch an increasing number of health insurance products, it can gradually accumulate data on users’ purchasing preferences for health insurance, thereby establishing corresponding data models.

Meanwhile,Shenzhen Xiaobu Running Technology Group, in collaboration with Shanghai Big Data Co., Ltd., Winning Health, and Munich Re, jointly established the Digital Insurance Research Center to study the new ecosystem of the insurance product market and develop digital models.

It is worth noting that Shenzhen Xiaobu Running Technology Group and all participating parties have formulated a clear roadmap for the development of the Digital Insurance Research Center:

First, under the broader direction of digital transformation, we will focus on innovative big data applications in insurance and health. Leveraging a foundational base of multi-party data resources, we aim to create valuable data-driven applications. A White Paper on Innovative Applications of Big Data in Insurance and Health is expected to be released in 2022, summarizing the innovative applications developed by the Digital Insurance Research Center.

Second, validate the digital infrastructure across all parties and preliminarily establish a privacy-preserving algorithmic scoring model based on full user authorization and full institutional authorization, for selected partner insurance companies to participate in pilot experiments;

Third, leverage resources from all parties and integrate new technologies such as artificial intelligence and big data to conduct in-depth research and development of insurance products.

Furthermore,The customized health insurance products offered by Shenzhen Xiaobu Running Technology Group will align with user needs to the greatest extent possible. “We first conduct research into users’ actual demands for health insurance, and then carry out reverse customization based on platform requirements,” said Xu Han. “We also regularly summarize key dimensions of our customized health insurance products and use these metrics to quantify and guide the development of the next product.”

“If I were to summarize the advantages of Shenzhen Xiaobu Running Technology Group in product design in one sentence, it would be its high-quality talent pool and extensive industry experience,” added Xu Han.

Notably, Shenzhen Xiaobu Running Technology Group has also established a comprehensive marketing system for its co-branded, curated custom health insurance products launched in partnership with insurance companies.

For example, Shenzhen Xiaobu Running Technology Group has launched 12- to 15-day specialized training camps and comprehensive internet sales process training for agents. It has developed corresponding systems to provide sales support tools and conduct end-to-end performance supervision for agents, while also offering training in sales methodologies and client acquisition techniques to help improve conversion rates.

Shenzhen Xiaobu Running Technology Group has also established partnerships with leading internet platforms such as ByteDance, Zhihu, Xiaohongshu (Little Red Book), Bilibili, WeChat, Baidu, and Yuedongquan. Through the Lecheng Star Map Initiative, it assists partners in enhancing essential elements of customer acquisition and marketing in the digital era, including personal IP building and content output, thereby effectively addressing the challenges health insurance companies face in acquiring customers.

Furthermore, in terms of marketing, Shenzhen Xiaobu Running Technology Group has successfully established its own product IP system. This includes the “Cheng Weishi” critical illness insurance and the “Le Yang Duo” annuity series, as well as two individual products launched in 2022 under the Health Guardian Bureau IP. Among these, Qingyun Wei No. 1 Children’s Critical Illness Insurance garnered strong market response due to its innovative coverage feature that allows continued claims for mild and moderate conditions even after a severe condition claim has been paid.

In layman's terms, LeYiTong functions as a marketplace offering medical services, health management services, and pharmaceutical care services tailored for insurance companies. Insurers can select suitable service packages to embed into their insurance product coverage based on their specific needs, or LeYiTong can intelligently match the required services to the insurers’ product liabilities, thereby achieving deep integration between health insurance and health management.

The Leyitong product library encompasses service items across eight categories: consultation, testing, treatment, examination, medical care and elderly support, prevention, emergency rescue, and reserves. These services include basic major disease green channel services, referral appointment services, precision health check-up services, advanced genetic testing services, early cancer screening services, and high-end stem cell storage services.

Furthermore, VCBeat has learned that Leyitongbian recently entered into an exclusive partnership with ReHeart Medical, which has launched the world’s first precision processing and analysis platform for coronary CTA imaging that integrates both “morphological” and “functional” assessments.

On one hand, Leyitong will empower Ruixin to standardize its services and promote deep integration with insurance; on the other hand, exclusive contracts for scarce medical resources also enable Leyitong to empower more new value-added health insurance products.

A business model aligned with industry development trends, an efficiently operating intelligent hub, and a fully closed-loop insurance-health ecosystem have earned Xiaobu Running the favor of capital investors.

In December 2021, Xiaobu Paopao secured RMB 100 million in Pre-A series financing, led by Danlu Capital. Beyond providing financial support, this institution, which specializes in investing in innovative medical technologies, also brought collaboration opportunities with innovative healthcare enterprises to Xiaobu Paopao.

For example,SmallShenzhen Xiaobu Running Technology Group Co., Ltd., facilitated by Redhill Capital, has partnered with the digital therapeutics company “Bosteng” to jointly promote the standardization and widespread adoption of insurance coverage for innovative treatments such as digital therapeutics, providing a comprehensive end-to-end digital solution for cognitive impairment among the middle-aged and elderly population.

“Our in-depth understanding of the insurance industry, the extensive industry experience accumulated by our core team members, our three key capabilities in product design, customization, and marketing, our comprehensive health management service offerings, and strong capital support are not only our competitive advantages but also the driving forces propelling our continued growth,” stated Xu Han. He added that, moving forward, Shenzhen Xiaobu Running Technology Group will continue to align with its strategic layout of “pharmaceuticals, healthcare, and commercial insurance,” placing particular emphasis on customized health insurance products and health management services.