Millions join Jack Ma's health 'mutual protection'

As of this month, nearly half of Xiang Hu Bao's members were migrant labourers while almost a third hailed from poorer rural areas. Ant said it is not an insurance product and is not subject to the same regulatory oversight governing traditional insu
As of this month, nearly half of Xiang Hu Bao's members were migrant labourers while almost a third hailed from poorer rural areas. Ant said it is not an insurance product and is not subject to the same regulatory oversight governing traditional insurers.PHOTO: AGENCE FRANCE-PRESSE

Ant Financial's Xiang Hu Bao has attracted 50m people since October inception

BEIJING • Billionaire Jack Ma's Ant Financial has done more than perhaps any company to disrupt China's gargantuan banking and asset-management industries.

Now it is trying to re-imagine health insurance.

Ant's Xiang Hu Bao, which means mutual protection in Chinese, has attracted 50 million people since its October inception, or more than five times the population of New York City.

Ant said Xiang Hu Bao is not an insurance product and therefore is not subject to the same regulatory oversight governing traditional industry players such as Ping An Insurance Group.

The product operates somewhat like a collective, in which members contribute evenly to payouts of as much as 300,000 yuan (S$60,471) when a participant falls critically ill.

Sign-up is free, there are no premiums or upfront payments, and disputes about claims are adjudicated by volunteer members, according to a statement from the company yesterday. In return for managing the process, Ant will take an 8 per cent administrative fee out of every payout.

Ant, best known for the Paypal-like Alipay service that underpins Alibaba Group Holding's online shopping platform, is redesigning financial products from money market funds to consumer credit that have long been dominated by state-owned Chinese behemoths.

 
 

The company's foray into healthcare comes at a time when the country is grappling with a rapidly ageing population, one of the more pressing long-term threats to the world's second-largest economy.

Ant yesterday said it hopes to sign up 300 million Xiang Hu Bao users within two years, which would represent more than 20 per cent of China's population.

"Ant can reach out to millions of users at a pace that traditional insurers can't," said Mr Steven Lam, a Hong Kong-based analyst at Bloomberg Intelligence. "This was the actual insurance model hundreds of years ago. They're going back to the basics."

Mr Ma's company joins a raft of start-ups angling to disrupt old-school health insurance in China, including Tencent Holdings and Sinovation Ventures-backed Waterdrop. Beijing-based Waterdrop crowdfunds from 78 million users and paid out more than 95 million yuan to members in roughly four months ended last October, according to its website.

The products may help fill a yawning gap in medical protection for the world's biggest population as its rate of critical illnesses soars, partly due to more expert diagnoses.

As of this month, almost a third of Xiang Hu Bao's members hailed from poorer rural areas, while nearly half were migrant labourers.

Anyone between 30 days old and 59 years old can join, provided they meet basic health criteria. As more people participate, the costs of the plan are spread more widely.

Given the growing user base, every member should pay no more than 0.1 yuan for every critically ill person, according to Ant. It covers a list of no more than 100 ailments.

If a dispute over claims arises, a jury consisting of hundreds of thousands of pre-approved users will vote on whether to pay out compensation.

Ant plans to leapfrog early adopters of the model by tapping the hundreds of millions of people who use its Alipay and money market fund operator Yu'E Bao. Payments are deducted from users' Alipay account on the 14th and 28th of every month, and anyone with a decent credit score can join.

Members who fall critically ill within 90 days of joining the plan will not be compensated.

To combat fraud, Ant is using the same blockchain technology that underpins digital currencies such as bitcoin, which rely on common verification by members.

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A version of this article appeared in the print edition of The Straits Times on April 12, 2019, with the headline 'Millions join Jack Ma's health 'mutual protection''. Print Edition | Subscribe