Shuidichou: Profiteering insurance business under the garb of public welfare

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Text / Lu Shiming

Source/Zinc Finance (ID: xincaijing)

Recently, the Internet crowdfunding platform “Water Drops” has been on the hot search again. Some media revealed that there is a gray chain in the fundraising link of Shuidichou for serious illness, and the fundraising intermediary behind it takes a cut of up to 70%. As soon as the news came out, Shuidichou issued an emergency statement.

Source: Waterdrop Official Weibo Source: Waterdrop Official Weibo

This is not the first time Shuidi has faced such a controversy, and every time it is questioned, its response is similar. First, blame the bad behavior on a third party, then emphasize the attributes of a non-profit organization by the way, and finally say a plausible request for supervision.

In terms of business relationships, Shuidicui may not be associated with these so-called third-party platforms. But whether it is the fundraiser or the donor, it is difficult to distinguish the relationship between them, and they trust the platform Shuidichou. From this point of view, Shuidichou should continue to increase its audit and inspection efforts to ensure the credibility of social welfare.

But in the face of repeated doubts, the core of each response of Shuidi is still to clear responsibility.

Is it difficult to review fundraising information? In this age of advanced information, this is definitely not a difficult task. However, as the starting business of Waterdrop, once the audit is increased, it is equivalent to reducing the traffic entrance. This will not only have a certain impact on its cash flow, but also cause a lot of damage to the subsequent insurance realization.

Therefore, Shui Di has to do a good job of routines in some links from the beginning of Shui Dichou to ensure the continuity of profitability. For example, in the fundraising stage, the review is relaxed to ensure the inflow of funds and users; another example is the elimination system at the end of the promotion stage to ensure the continuous expansion of the user pool; another example is the “attractive” promotion in the insurance sales link to ensure the conversion rate and realization.

This interlocking traffic business has made it impossible for water droplets to turn a blind eye. But how long can you do business under the guise of public welfare?

Doing crowdfunding is just a process

In the eyes of many people, after donating money through the serious illness crowdfunding platform, the money can be directly given to patients in need.

But in fact, donors have to donate money to the platform first, and when enough money is raised, the platform will transfer it to patients uniformly. That is to say, there is a time difference in between. According to the relevant agreement of Waterdrop, if there is no special reason, the default fundraising period is 30 days.

A month’s time is crucial for a business that plays with cash flow. Fundraising platforms with a small number of users may not be able to reflect this, but for a large platform like Shuidichou, as long as the funds keep circulating, the platform’s funds can always be maintained at a large scale.

According to the financial report for the first quarter of 2022 released by Waterdrop, as of the end of March 2022, more than 403 million people have donated about 50.9 billion yuan to nearly 2.5 million patients through Waterdrop Funding.

According to the previous prospectus and financial report, as of December 31, 2020, Waterdrop has helped raise more than 37 billion yuan in total. In the first quarter of 2022, the fundraising scale of Waterdrop will be about 2.5 billion yuan.

From this, it can be calculated that the fundraising scale of Waterdrop in 2021 will be about 11.4 billion. Even if it is calculated according to conservative financial management methods, the fundraising funds can generate 50 million to 100 million yuan of interest on the account of Shuidichou every year.

However, for Waterdrop, which has already been listed in the United States, the money is still not enough to satisfy the appetite, and it needs a larger scale of capital. In other words, Waterdrop needs more fundraisers and donors. So how can we achieve the growth of user scale? Relaxing the review is undoubtedly a quick and effective way.

Mr. Li’s mother in Xi’an was hospitalized for heart disease at the end of 2021. On the second day of admission, a man who claimed to be a Shuidicho employee approached Mr. Li and said that he could help him crowdfund medical expenses, and only needed to send relevant information pictures. Don’t worry about other matters.

Mr. Li told Zinc Finance: “I thought it was a liar at the time, but there was nothing to lose, so I let him do it. After the donation link came out, I realized that it was very miserable. My mother’s illness is really serious, but It’s not that serious, but the salesman said that it would be quicker to donate.”

Mr. Li expressed to Zinc Finance Mr. Li expressed to Zinc Finance

In addition, according to Mr. Li’s recollection, the doctor said that about 100,000 yuan was needed for medical expenses, and the medical insurance reimbursement was basically about 50,000 yuan. The man, who claimed to be an employee of Waterdrop, directly filled in the fundraising amount of 100,000 yuan without asking Mr. Li.

It is understood that although the economic situation of Mr. Li’s family is not rich, as a technician of a state-owned enterprise, his life has not been too bad. He has no real estate under his name, but he owns a domestic car worth about 100,000 yuan.

Mr. Li’s experience is not an exception. Although Shuidichou has continuously stated that it will crack down on false fundraising, the fact is that the fundraising process of Shuidichou is still very simple, which is divided into four parts: basic information, help instructions, medical certificates, and economic status. .

The help description part can be completely applied to the “template” provided by Shui DiChou, and in the medical certificate part, some “volunteers” will entangle the doctor with the patient and issue a certificate of serious illness in order to increase the fundraising amount. As for the economic situation, it is basically up to the fundraiser to “decide”.

Source: Waterdrop Source: Waterdrop

The looseness of the review mechanism can indeed bring more users and donation funds to Shui DiChou, but it also continuously damages the credibility of the public welfare, making the donors unable to believe who is the one who really needs help, and letting the people who really need help. Not getting the help it deserves.

Traffic is the core

For Waterdrop, its core is by no means the interest brought by the capital pool, but the flow.

Shuidicho entered the market with 0 handling fee, and this also means that for every 1 million yuan raised, Shuidicho will lose about 20,000 yuan, which is also an important reason why Shuidicho is automatically classified as a “public welfare organization” one.

Subsidies are not a long-term solution. As the core figure of Waterdrop, Shen Peng was the No. 10 employee of Meituan. Offline push is the strength of Meituan, and this strength was also brought to Waterdrop by Shen Peng.

According to previous CCTV reports, Shuidichou has dispatched local pushers in major hospitals in more than 40 cities across the country to promote sales, persuading patients to do Shuidichou by sweeping buildings, and after releasing the fundraising information, it is then disseminated through the Internet and circle of friends. The commission for each transaction is huge, and many people even earn more than 10,000 yuan per month.

In order to quickly occupy the market and stimulate the efficiency of the team, Shuidichou also set up a final elimination system. Employees must complete at least 35 orders per month, otherwise they will be eliminated.

Pushing alone is not enough. In 2019, Waterdrop received two rounds of huge financing totaling about 1 billion yuan. At the high-light moment of being sought after by capital, there are media reports. The person in charge of the relevant department of today’s headlines once revealed that water drops put millions of advertisements on us every day.

Through subsidies, ground promotion, online promotion, and the communication effect of Moments, Waterdrop has gathered a large number of users in a short period of time. But with the questioning of the public and the improvement of supervision, Shuidichou also began to become less aggressive. However, the theme of “traffic is the core” remains unchanged.

Zinc Finance recently found on a recruitment website that Shijiazhuang Waterdrop Interconnect Technology Co., Ltd., a subsidiary of Waterdrop, is recruiting “Waterdrop City Agents”, “Waterdrop City Partners” and “Waterdrop Chips” in Langfang, Hebei, Yangzhou, Jiangsu, Jiaozuo, Henan and other places. Fundraising Partner, etc.

In addition, shows that Waterdrop is still recruiting fundraising consultants in dozens of cities across the country, including Shanghai, Wuhan, Zhanjiang, Shenzhen, and Zhongshan.

Source: Liepin Source: Liepin

According to the 2021 financial report of Waterdrop, the company has only 2,936 full-time employees. The decline in full-time headcount in 2021 is largely due to the company’s outsourcing of certain sales and marketing functions to third parties, the company said.

In the risk warning section of the financial report, Shuidi said: Our existing risk management system may not be sufficient to fully identify or mitigate all the risks we face. We are exposed to fraud or misconduct by employees, fundraising consultants, customer service personnel, and other third-party organizations.

The funny thing is, Shuidi also says: We now employ third-party user acquisition channels to attract customers for our insurance products on our platform.

Source: Waterdrop Financial Report Source: Waterdrop Financial Report

Whether it is explained from the financial report or the actual recruitment information, it is enough to prove the fact that Waterdrop authorized a third-party approach. Among these so-called third parties, there are many “professional fundraising promoters”.

The operation logic of professional fundraising promoters is actually very simple. The so-called “promotion” is to use the personal connections and network resources in their hands, and then forward a large number of patients’ fundraising links, so that more people can see the fundraising information. Regardless of the commission issue of “professional fundraising promoters”, such promotion will undoubtedly bring more exposure to Waterdrop and acquire more new users.

In addition, Zinc Finance provided information through Mr. Lu (pseudonym) and found that he received 1,008 donations and 668 retweets. According to the rules of Shuidichou, donations must become users, that is to say, a single donation from Mr. Lu can move thousands of people by one person.

Source: Mr. Lu's donation page Source: Mr. Lu’s donation page

Ordinary people can achieve this effect. You can imagine what kind of traffic scale Waterdrop will get under the operation of professional fundraising promoters.

The importance of traffic in the Internet era is self-evident. Water droplets with huge traffic need to accelerate their monetization and be responsible for the capital behind them.

Selling insurance is the ultimate goal

After being quickly involved in a large number of users, Shuidi naturally has to find a profit point to realize. Since users donate from serious illnesses, commercial insurance that is close to its scene has become the best choice for Shuidi.

The commercial insurance commission itself is relatively high. For critical illness insurance with an annual fee of several thousand, the online commission is generally around 50%. After Shuidi obtains the insurance broker license, the commission will go to a higher level. Profits are even more horrific if you sell products jointly developed with insurance companies.

According to the prospectus of Waterdrop, in 2020, Waterdrop achieved revenue of 3.028 billion yuan, a year-on-year increase of 100.4% compared with 1.511 billion yuan in 2019; of which insurance commission income accounted for as high as 89.1%.

Source: Waterdrop Prospectus Source: Waterdrop Prospectus

As of December 31, 2020, the cumulative number of insurance users served by Waterdrop was approximately 79.4 million, the cumulative number of paid insurance policies reached 30.7 million, and the premium was as high as 14.4 billion yuan. Judging from the latest data, the financial report for the first quarter of fiscal year 2022 released by Waterdrop shows that its net operating income in the first quarter of this year was 648.7 million yuan, of which insurance-related income was 628.2 million yuan.

There is no problem in selling insurance itself, but under the dual factors of massive users and high profits, the water drops obviously failed to control the greed. From the water drop chip to the water drop insurance mall, there are routines to lure users to insure.

Zinc Finance found that when exiting the water drop donation page, a red envelope-style pop-up window will automatically pop up, which displays “6 million medical insurance”, which is very tempting. After clicking on it, you will come to the insurance page, and the bottom shows that it only costs 0.92 yuan per day.

Source: Waterdrop Source: Waterdrop

After clicking Apply for Insurance, in the “I have read and agree” section, it contains a lot of relevant information such as insurance terms and health notices.

Source: Waterdrop Source: Waterdrop

As the premise of the insured person, health notification determines whether the insured person can get a claim after an accident. The insurance terms also contain important information such as disclaimers and disease definitions. Waterdrop not only weakens the insurance rate by days, but also fails to fulfill the “inform” obligation of insurance, which greatly damages the rights and interests of consumers.

In fact, the practice of water droplets has been even worse before. Such as “Congratulations on being selected as a caring health mutual aid experience user”, “click to receive exclusive privileges”, “1 yuan to receive 300,000 anti-cancer mutual aid”, “6 million medical insurance fund of 3 yuan for the first month and 11.5 yuan for the second month”… These advertisements that mislead users with ultra-low price thresholds emerged one after another, and they did not improve until the relevant policies were introduced by the supervision.

And when the user clicks “I agree” in confusion, and then clicks on the insurance, he will directly come to the payment page. If you exit at this time, the page will display a pop-up window again to induce users to pay at a “low price”.

Taking advantage of the compassion of donors in this way, displaying insurance advertisements everywhere on the page, and constantly sending messages to harass and bombard them with corporate official accounts, is really low-level.

Water drop guarantees two "request" text messages for half an hour Water drop guarantees two “request” text messages for half an hour

Mr. Qian, a former Shuidibao staff member, told Zinc Finance: “The development of Shuidi is not very good now, the reason is that it is blindly for sales, for the conversion rate, and keeps talking about love and responsibility, but I dare not say that I am in the business. Selling insurance. In my opinion, it is not shameful to sell insurance in an open and honest manner.”

Former Shuidibao employees expressed to Zinc Finance Former Shuidibao employees expressed to Zinc Finance

According to this Mr. Qian, Shuidibao also introduced Metropolis telemarketers, using the telemarketing model to accumulate premium scale and data, just to look better on the books. It is precisely for these reasons that Mr. Qian, who was disappointed, chose to leave.

Whether it is crowdfunding or insurance, there is no problem in itself. The problem is that they absorb traffic under the guise of public welfare, and sell insurance in the name of love to attract money. This has greatly damaged the credibility of public welfare undertakings, and it has also made the insurance industry even worse.

Public welfare belongs to public welfare, and business belongs to business. Waterdrop needs to understand this.

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