When Insurance Meets Big Data and AI: HLT Insurance Files IPO Prospectus

We often encounter fundraising campaigns from platforms such as “Shuidichou” and “Qingsongchou” on social media feeds. Behind these appeals lie the immense financial burdens of medical expenses faced by certain families or individuals, with incidents of poverty caused or exacerbated by illness occurring from time to time. These phenomena actually reflect the current inadequacies of the healthcare security system.

A comprehensive social medical security system should encompass state-sponsored coverage, social insurance, and commercial health insurance. As a supplement to national medical insurance, commercial health insurance works in tandem with public schemes to provide residents with comprehensive, multi-tiered protection.

Although China's commercial health insurance industry started late, it has developed rapidly. In the course of its development, it has not only absorbed best practices from foreign markets and other insurance sectors but also applied information technology to the field of commercial health insurance, thereby promoting the healthy development of commercial medical insurance.

HLT Insurance, an emerging player in the commercial health insurance market, leverages big data and artificial intelligence to empower the insurance industry. It provides end-to-end services and solutions covering the entire insurance lifecycle—from product design to underwriting and claims settlement—making insurance smarter and achieving its mission of “Equal Coverage, Safeguarding Health.”

VCBeat (WeChat: vcbeat) interviewed Li Wei, General Manager of HLT Insurance, and Li Yuhan, Business Director. The two provided a detailed overview of HLT Insurance’s technological features, products and services, business model, and development plans.

Li Wei, General Manager of HLT Insurance (left), and Li Yuhan, Business Director (right). Photo provided by the interviewee.

HLT Insurance, a subsidiary of HappyLifeTech, has dedicated itself to advancing medical big data processing and artificial intelligence technologies in recent years. Leveraging extensive real-world data observations, the company has conducted over 1.3 billion disease graph training iterations and established more than 3,000 specialized disease models.

Leveraging these technologies and accumulated expertise, HLT Insurance has independently developed products such as a health prediction scoring model, an intelligent underwriting robot, an intelligent medical underwriting engine, and an intelligent claims processing engine, thereby constructing a dataTechnologyA driver-based end-to-end health insurance development solution that significantly enhances the efficiency of customer-centric, differentiated health insurance product development and customer service operations.

Li Yuhan provided a detailed introduction, stating that HLT Insurance’s current business is primarily divided into three segments: first, health insurance technology enablement services, such as intelligent underwriting, intelligent claims processing, and OCR-assisted data entry; second, the development of new insurance products based on medical knowledge graphs; and third, collaboration with local governments or healthcare security administrations to formulate healthcare security policies or provide other technical support.

Specifically, insurtech services include intelligent medical underwriting solutions and intelligent claims adjustment engines. The intelligent insurance application robot within the underwriting solution enables real-time online Q&A interactions and intelligently matches underwriting conditions; the intelligent underwriting engine facilitates rapid and accurate entry of health data and predicts comprehensive underwriting risks based on disease prediction models.

During the claims adjudication phase, medical data is processed through methods such as direct data connectivity, OCR recognition, and manual entry, leveraging automated structuring and normalization algorithms based on a massive medical big data lexicon. Meanwhile, complex product rules are flexibly applied to deliver services including inappropriate medication review, clinical pathway rationality assessment, medical fraud detection, and DRG-based cost containment.

HLT Insurance collaborates with insurance companies to develop health insurance products that are truly “personalized for each individual.” Li Yuhan stated that traditional health insurance basically covers only healthy individuals, while those who genuinely need health protection either have no options for coverage or must “bypass” risk control systems to obtain insurance despite pre-existing conditions. This situation has resulted in a lose-lose scenario: the public’s distrust of insurance and increased conservatism among insurance companies.

Data-driven health insurance design is based on statistics of disease populations, analysis of disease risk factors and treatment pathways, to build a disease risk model using big medical data. It then performs actuarial risk assessment for high-risk groups, formulates product terms and bundles medical services, while also providing data-driven precision services during underwriting, claims processing, product launch and sales, as well as cost control.

Collaboration with government and medical insurance management departments represents a direction of greater social significance. Currently, China’s national medical insurance system is characterized by regional pooling. This approach addresses not only cost-containment needs but also necessitates structural adjustments to reimbursement policies. For instance, if a specific region exhibits a high incidence rate of a particular type of cancer, the medical insurance fund management authorities should倾斜 (provide preferential support) toward such diseases within their policy frameworks.

With the emergence of new healthcare service models such as internet-based medical care, health insurance schemes may also seek to extend coverage. To this end, they need to design health insurance policies tailored to local conditions and formulate rules grounded in health economics and pharmacoeconomics. Underpinning these efforts is the critical role of big data processing and analysis.

From a business perspective, the sector in which HLT Insurance operates is crowded with numerous players, including prominent companies such as Ping An Health Technology and ZhongAn Technology. How will HLT Insurance stand out in the market? Li Wei told VCBeat that its technological accumulation, particularly in big data and artificial intelligence, forms the foundation for HLT Insurance’s confidence in “empowering” the insurance ecosystem and establishing a unique competitive advantage.

Specifically, HLT Insurance’s core strengths are manifested in four areas, the first of which is its cognitive processing capability for complex medical texts. As is well known, China has a vast number of hospitals with varying levels of informatization, and medical text records do not follow a universal template, resulting in highly complex case documentation. This makes it difficult for insurance companies to effectively identify the value embedded in medical texts, necessitating support from technology firms. Even the currently prevalent medical AI technologies must confront the “pitfalls” of case texts, having to first overcome the hurdle of structuring electronic medical records.

Li Yuhan cited as an example that multiple media outlets previously reported on IBM Watson’s collaboration with insurance companies in Japan, where artificial intelligence technology was applied to underwriting and claims processing, significantly improving the efficiency of insurance claims operations. Although the application of AI in insurance services is not yet widespread across the industry, it does point to a future direction. If this model is to be replicated in China, the greatest challenge may lie in handling complex medical texts within the Chinese language system—an area where HLT Insurance excels.

The second advantage is that HLT Insurance has built a disease knowledge graph based on massive real-world data. Through big data analytics, it provides decision support for customer analysis, insurance product design, medical cost control, and claims risk management. For instance, it can analyze the cost drivers and health status of the insured population to formulate actuarial rules, or identify key factors influencing medical expenses, thereby enabling refined cost containment while ensuring medical quality and service experience.

A high-caliber team and exceptional operational capabilities constitute the core competitive advantages of HLT Insurance. The core team comprises internet industry veterans with years of experience in online operations and management, senior scientists specializing in big data, cloud computing, and artificial intelligence from Google, Microsoft, BAT (Baidu, Alibaba, Tencent), and globally renowned laboratories, as well as seasoned business experts in medicine, pharmacy, and insurance. This diverse team, bringing together multifaceted expertise, empowers HLT Insurance with robust product refinement capabilities and strong execution.

According to data from Minsheng Securities, from 2000 to 2017, the compound annual growth rate (CAGR) of China's health insurance market reached 28%. From 2012 to 2017, commercial health insurance grew rapidly at a CAGR of 38%, making it the fastest-growing segment in the insurance industry. In 2017, the original premium income of health insurance reached RMB 438.9 billion, five times that of 2012. Its proportion of life insurance premium income continued to increase, reaching 16.4% in 2017, and accounting for 12% of total premium income.

A research report by GF Securities points out that commercial health insurance is increasingly becoming an important component of China’s multi-tiered medical security system. For instance, in the context of the basic medical insurance system for urban and rural residents, policies encourage the introduction of competitive mechanisms and the delegation of administrative services to qualified commercial insurers and other social entities through government procurement of services.

Regarding critical illness insurance for urban and rural residents, a model involving commercial insurance institutions as operators is adopted to leverage market mechanisms and the professional advantages of these institutions, thereby improving the operational efficiency, service level, and quality of critical illness insurance. In the area of long-term care insurance, efforts are being made to explore and establish a multi-tiered long-term care security system. This includes actively guiding social assistance, commercial insurance, and charitable endeavors to serve as beneficial supplements, addressing care needs at different levels. Commercial insurance companies are encouraged to develop market-appropriate insurance products and services, and to expand commercial long-term care insurance that aligns with social long-term care insurance, so as to meet diverse and multi-layered demands for long-term care protection.

From the perspective of health insurance companies, the primary objectives are cost reduction and efficiency enhancement, as well as the expansion into new products and markets. The emergence of insurtech companies has met these demands. For instance, intelligent underwriting and claims processing services can reduce insurers’ labor costs, while product design based on precise risk control models can unlock untapped blue-ocean markets.

For the health insurance industry, now may be an excellent time to embark on a new phase of growth. This is driven by favorable “fundamentals,” such as demographic structural adjustments and consumption upgrading. Moreover, after years of market education, particularly following the surge in popularity of “million-yuan medical insurance” products, public acceptance of health and medical insurance has continued to rise.

Beyond this, we observe a proliferation of innovative models in the commercial health insurance market, such as integration with medical services, health management, and pharmaceutical retail. Commercial health insurance is increasingly becoming a key payer for medical care and a coordinator of healthcare resources.

Therefore, future health insurance will not be merely a standalone product or service, but rather an extensive ecosystem deeply integrated with physical examinations, medical care, health management, technology, and elderly care. While health insurance products provide risk protection and financial compensation, the associated service systems will determine residents’ future healthcare experiences and even their overall quality of life. Within this framework, medical big data and artificial intelligence (AI) technologies will play a pivotal role.

Li Yuhan also stated that, based on international experience, commercial health insurance holds significant potential for expansion, such as through Health Maintenance Organizations (HMOs), Pharmacy Benefit Management (PBM), and Accountable Care Organizations (ACOs). The innovation in commercial health insurance lies in its integration and connectivity with various segments of healthcare services, thereby better creating value for payers, insured individuals, and other stakeholders.

Li Wei pointed out that HLT Insurance has already partnered with more than ten insurance companies, including CPIC-Allianz, Taikang, Sunshine Insurance, and Huaxia Insurance, providing them with insurtech services. Disease-specific insurance products co-developed with these partners—such as those covering pediatric hematologic disorders, breast cancer, thyroid nodules, and pulmonary nodules—are also set to launch soon.

Regarding HLT Insurance’s future development plans, Li Wei stated that the company will continue to strengthen its technological capabilities, enrich its insurtech services and products, and consistently empower the health insurance market with big data and artificial intelligence technologies. By supporting the industry’s continuous growth, HLT Insurance aims to achieve its goal of “equal coverage, safeguarding health” in the health insurance sector.