VHS Health Tech Files IPO Prospectus: Pioneering Full-Scale Underwriting to Transform China's Health Insurance Market

The outbreak of the COVID-19 pandemic in 2020 had a significant impact on most industries, and the insurance sector was no exception. Many insurance companies experienced year-on-year declines in performance during the first half of 2020. In stark contrast, the health insurance market witnessed rapid growth during the pandemic. According to data from the China Banking and Insurance Regulatory Commission (CBIRC), the original premium income for health insurance business reached RMB 817.27 billion in 2020, an increase of RMB 110.67 billion year-on-year, representing a 15.7% growth rate. This growth rate exceeded that of major insurance categories such as life insurance, property insurance, and accident insurance.

Zhang Zhiyun, CEO of VHS (Shanghai) Health Technology Co., Ltd. (hereinafter referred to as “VHS Tech”), stated in an interview: “Amid the steady development of health insurance, certain issues are increasingly coming to light, including insufficient risk control capabilities, high product homogenization, and the need for further improvement of the service ecosystem supporting health insurance. These challenges may be addressed through the advancement of insurtech.”

Prior to joining VHS Group, Zhang Zhiyun held senior management positions in the operations departments of several Fortune 500 companies. Leveraging VHS Technology’s continuous innovations and breakthroughs in insurtech, as well as her profound insights into the insurance industry, Zhang Zhiyun was named to Forbes’ “25 Most Prominent Women in Chinese Business” list in 2018.

It is understood that VHS, established in 2014, leverages its digital technological capabilities based on the “Three Engines” (Artificial Intelligence + Big Data + Health Management) and its professional health insurance expertise to drive the upgrading of the health insurance value chain. It provides insurers and internet platforms with a closed-loop suite of health insurtech services, ranging from product customization, digital risk control, and intelligent underwriting and claims processing, to systematic health management.

Its Health Insurance Cloud 2.0, launched at the end of 2019, pioneered the “full-coverage underwriting” product operation model, becoming a pioneering innovation in AI-driven insurtech capable of achieving ultra-broad coverage. It has secured contracts and established in-depth collaborations with more than half of the authoritative institutions in the sector, including insurance companies, healthcare IT platforms, healthcare factor trading platforms, renowned internet platforms, and health big data platforms.

The rise in public health awareness has gradually driven the development of China’s health insurance market. From 2011 to 2019, gross written premiums for health insurance in China surged from RMB 69.2 billion to RMB 706.6 billion, representing a compound annual growth rate (CAGR) of 34%. However, two major pain points—ineffective industry-wide risk control and information silos—have hindered more rapid growth in the health insurance sector, creating an urgent need to integrate insurance with big data from healthcare and medical services.

Furthermore, the public’s early perception and positioning of health insurance equated it with wealth management products. The inherent health protection attributes of these products were overshadowed by features such as “premiums” and “claims,” resulting in services that almost exclusively provided claim payouts upon insured events, without accompanying health management services. This phenomenon has led some healthy individuals to discontinue their policies after purchasing health insurance, as they did not experience any “payouts.” Consequently, the proportion of “non-healthy” individuals among those who renew their policies has been increasing, leading to a corresponding rise in loss ratios.

Risk control is of paramount importance to the insurance industry. During the traditional risk management phase, insurers largely relied on manual underwriting and empirical judgment for policy underwriting and claims assessment. This approach was not only inefficient but also prone to errors and omissions, often resulting in a “one-size-fits-all” strategy for applicants. The long-standing operational mindset in life insurance has led many insurers to adopt an extensive,粗放型 (rough-and-ready) model when managing health insurance businesses. However, such broadly designed products can no longer meet policyholders’ demands for health services, nor can they achieve precise risk control in health insurance.

Zhang Zhiyun noted, “With the shifting demographic structure of China’s aging population, rising healthcare expenditures, an increasing burden of chronic diseases, and growing health awareness, public demand for health insurance is continuously on the rise. As a key component of China’s multi-tiered health security system, policy support is also being extended to foster the development of commercial health insurance.”

Driven by the continuous development of health insurance and the market’s demand for insurtech, VHS Group entered into a strategic partnership in 2013 with Mayo Clinic, the leading medical institution in the United States, to comprehensively introduce its decision trees for differential diagnosis covering 10,800 diseases. Prior to this collaboration, VHS’s risk control framework comprised only disease management and health promotion; the integration of Mayo Clinic’s expertise established the critical component of managed care. With this addition, VHS Group’s three-pillar risk control system was complete, paving the way for the official establishment of VHS Technology in 2014.

A Decade of Refinement: With the widespread adoption of intelligent risk control technology, VHS upgraded and iterated its Health Insurance Cloud System in 2019, launching an innovative product model that integrates risk control checkpoints into every operational link. By leveraging the continuous evolutionary capabilities of its three core engines—“Big Data + Artificial Intelligence + Health Management”—the company is committed to achieving “full underwriting” for all users with insurance intent.

According to reports, VHS’s “Full-Coverage Underwriting” solution comprises four core engines: AI-driven “Health Risk Diagnosis,” “Health Risk Prescription,” “Preferred Health Services,” and “Health Risk Control Leverage.” These capabilities enable the generation of accurate user profiles reflecting actual health and medical risks, thereby facilitating personalized health risk management plans. Leveraging a product design and pricing model tailored to “diverse needs across large populations,” the solution provides customized products and more suitable health management services for both healthy and non-healthy individuals, ensuring comprehensive health protection. Meanwhile, it empowers insurance institutions to achieve scenario-based coverage on an extensive scale with no underwriting rejections, allowing health insurance businesses to effectively manage risks while expanding volume.

To ensure the accuracy of risk diagnostics, VHS has established its own mapping library containing millions of health, medical, and health insurance corpus entries; a dictionary directory with millions of health and medical terms; and a tag library for insurance products with tens of millions of entries. These resources have enabled the intelligent application of big health data within the insurance industry. Leveraging a massive medical database comprising hundreds of millions of records and advanced data processing capabilities, VHS supports refined operations for health insurance products, facilitates more precise product classification and development, moves away from the extensive "wealth-management-oriented" model, and completes the R&D of customized, innovative health insurance products. This ultimately achieves "full underwriting" for users with insurance intentions. It effectively enhances insurers' risk control capabilities and provides support for product optimization, differentiated pricing, and precision marketing.

Notably, by continuously strengthening its AI and big data technological barriers, VHS has begun to build a “technology” moat. It is committed to providing insurers with turnkey health insurance risk control services, implementing an integrated risk control model that combines demand-side intervention, payer-side risk control, and provider-side evaluation. Specifically, this includes:

1. Insurance Operations Risk Control: Underwriting Risk Control, Claims Risk Control;

2. R&D of innovative health insurance products;

3. Risk Control for Basic Medical Insurance;

4. Turnkey Health Insurance Technology Solutions.

At the technical level, VHS will also accelerate the iteration and optimization of AI and big data technologies, continuously deepening machine learning and model training based on local big data. Meanwhile, by integrating health insurance technology risk control capabilities, it will achieve the integration and risk management of commercial insurance and medical insurance, empowering the entire insurance industry.

Regarding future development, Zhang Zhiyun stated that VHS will continue to leverage its position as industry infrastructure and its leading insurtech capabilities to accelerate the aggregation of data resources and health insurance operators in Shanghai, creating a virtuous cycle where “technology export” drives “resource convergence”—with Shanghai as its base and influence extending across China.