Yuanbao Inc. (NASDAQ: YB), a leading Nasdaq-listed insurtech company, reported mixed annual results on March 18. The company demonstrated impressive performance with 2025 revenue reaching 4.373 billion yuan, a 33.1% year-over-year increase, and net profit surging 51% to 1.308 billion yuan. New policies issued exceeded 30.66 million.
While achieving rapid growth, the company increased its R&D investment by 58%, building a vector knowledge database containing over 2 million medical insurance entries and deploying more than 4,900 AI models. Yuanbao also developed its own insurance advisor Agent, which provides personalized insurance plans based on users' health conditions, family structure, and coverage needs. These advancements suggest that technology serves as a key driver for Yuanbao's growth.
However, sales and marketing expenses accounted for 73% of total operating costs, indicating that the company's technological narrative remains heavily reliant on traffic acquisition. Simultaneously, over a thousand consumer complaints have emerged, challenging the effectiveness of its technological advancements. These complaints raise critical questions about whether Yuanbao's AI technology genuinely empowers users or merely serves as conceptual packaging.
Financial Performance: AI as Engine or Filter? Yuanbao's 2025 financial report highlighted both volume growth and quality improvement, with key metrics including revenue, profit, and cash flow showing strong performance. The company's expansion combines scale growth with enhanced profitability.
In 2025, Yuanbao generated 4.373 billion yuan in revenue, up 33.1% year-over-year, with steady quarterly growth. Fourth-quarter revenue alone reached 1.175 billion yuan, increasing 32.2%. Net profit jumped 51% to 1.308 billion yuan, significantly outpacing revenue growth and lifting the net profit margin from 26.4% in 2024 to 29.9%. By the end of 2025, the company held 4.04 billion yuan in cash, equivalents, and fixed deposits, with annual operating cash flow of 1.495 billion yuan. Investment income soared from 6.4 million yuan to 45.2 million yuan, a more than sixfold increase.
From a business perspective, Yuanbao's "tech plus insurance" strategy appears to be paying off. Revenue is divided into three segments: insurance distribution services, system services, and other businesses. System services generated 2.923 billion yuan, up 33.2% annually, accounting for nearly 70% of total revenue. Insurance distribution services brought in 1.4468 billion yuan, a 33.8% increase, representing 32.56% of total revenue. New policies reached 30.66 million, growing 36.7% year-over-year. Other business revenue fell 60.4% to just 3.6 million yuan, highlighting the company's strategic focus.
Over 1,000 Complaints: Blemishes Beneath the Surface Despite impressive figures, Yuanbao faces significant challenges. As of March 20, 2026, the company had accumulated 1,218 complaints on the Black Cat Complaint platform, with frequent issues including "automatic deductions," "misleading elderly users," and "difficult policy cancellations." These user reports reveal critical flaws in the company's rapid growth trajectory.
Compliance risks appear systemic rather than incidental, spanning sales, operations, and service. Sales-related violations have been a longstanding issue. In 2022, Yuanbao's wholly-owned subsidiary was fined and warned by the Shaanxi banking and insurance regulator for violating internet insurance regulations. In 2024, a partner organization was publicly criticized by the Gansu Consumer Association for unauthorized deductions.
During the insurance application process, automatic renewal and password-free payment options are often pre-selected without clear confirmation. Premium structures are obscured, and health declaration steps are oversimplified, leading many users to purchase policies without fully understanding terms, fees, or cancellation conditions.
Claims handling reveals a dual standard. While Yuanbao's claims report highlights medical insurance settlements as fast as 3.4 minutes, this efficiency applies mainly to standard, straightforward cases. Users report delays, uncooperative staff, and cumbersome procedures for complex claims, undermining trust in the company's service quality.
As an insurance intermediary, Yuanbao bears responsibility for product selection, information disclosure, and dispute resolution. However, its operations appear skewed toward customer acquisition and conversion, with after-sales service neglected. User complaints are often met with delays, perfunctory responses, or simple refunds, sidelining consumer rights and exposing systemic compliance gaps.
According to Chen Hui, Director of the China Actuarial Science Lab at the Central University of Finance and Economics, such issues reflect structural contradictions within the internet insurance sector during rapid expansion. When efficiency is maximized and customer conversion becomes the overriding KPI, the original purpose of technology serving people becomes distorted.
Traffic-Driven Growth Reveals Underlying Bubbles Yuanbao's growth model relies on a cycle of traffic acquisition, premium conversion, and commission monetization. As internet traffic红利 diminishes and product homogenization intensifies, this model's sustainability faces severe challenges.
Beyond compliance risks, dependence on traffic and product structure issues represent internal vulnerabilities. Despite its AI-driven narrative, Yuanbao's foundation shows signs of a growth bubble.
The company's expansion is heavily dependent on marketing expenditure. In 2025, sales and marketing costs reached 2.217 billion yuan, accounting for 73% of total operating expenses. Although this ratio decreased slightly from 77.5% in 2024, it remains elevated. In contrast, R&D spending grew 58% to 365 million yuan but represented only 12.02% of total costs. This "heavy marketing, light R&D" cost structure contrasts sharply with Yuanbao's identity as a technology company.
While AI has improved conversion efficiency, the core business model remains that of a traffic intermediary. Revenue growth driven primarily by marketing raises questions about long-term stability. Moreover, the company's lack of independent customer acquisition and user operation capabilities leaves it vulnerable to changes in channel policies and rising traffic costs, threatening its growth narrative.
Product structure presents another concern. Over 99% of Yuanbao's policies are short-term insurance, aligning with the internet insurance conversion logic due to low premiums, low barriers, and short decision cycles. However, short-term policies inherently suffer from low user loyalty, unstable renewal rates, and difficulty in long-term retention. To sustain growth, Yuanbao must continuously invest heavily in marketing to acquire new customers.
Customer acquisition costs were approximately 80 yuan per policy in 2024 and 75 yuan in 2025. With low commission rates on short-term policies, profit per customer remains limited, creating a cycle of high investment for modest returns. A deeper issue is whether short-term policyholders can be converted into long-term insurance consumers. Yuanbao's prospectus disclosed user retention rates of only 11.3% in 2022 and 27.6% in 2023.
Balancing capital's growth demands with users' trust, and reconciling AI efficiency with the integrity essential to insurance, represents a critical challenge not only for Yuanbao but for the entire internet insurance industry. As AI becomes less of a differentiator, user trust may emerge as the true competitive moat.
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