Ant Financial, through its online apps and appeal to consumers and small
businesses, has already proven to be a disruptor in the financial
industry. Now, it is looking to be a disruptor in the health insurance
industry. By pooling very small contribution from a large number of
subscribers, the company has been able to provide costly medical treatment for
many in China.
While Ant is not a public company, some access to the company is
available through Alibaba which has a 33% stake, according to the Financial
Crowdfunding for Health Insurance
During October 2018, Ant Financial rolled out its Ziang Hu Bao “mutual
protection” play for users of Alipay which so far has signed up 50 million
participants, according to the Wall Street Journal,
which when on to note that the plan provides for lump-sum payouts for 100
critical injuries or diseases. Each participant is required to contribute
a small amount for each claim. The article noted that 18 payouts were
made during April 2019 and the amount that each participant had to contribute
was 0.01 yuan per claim.
Whoever joins Ant’s platform is eligible for one-time cash
payouts. Payouts are determined based on the facts of the cases
submitted. The total payouts are divided among the
participants with that sum determining the twice-monthly premium each member
must pay, rather than the traditional model of paying premiums up-front for the
promise of future protection, according to DigFin.
Ant charges an 8% administrative charge from each payout.
Additionally, Ant has edibility requirements, according to DigFin. First, a member must have a credit score of at least 650 which is seen as a
proxy that the member is an active consumer in Alibaba’s ecommerce platform and
pays his bill on time. Payments are also deducted from a user’s Alipay
account and the platform aims to target Alipay’s user base. Second, the member
must be under 59 years old and have no pre-existing conditions.
Ant financial is targeting 300 million participants in the next two
years, according to the Wall Street Journal. The company is also looking to
roll out the platform in other emerging markets countries.
Others Joining the Fray
Ant is one of about a dozen private startups in China providing
crowdfunding platforms. Even Chinese ride-hailing giant Didi Chuxing
launched a similar product, according to the Wall Street Journal.
And Ant’s platform is not the first. Tencent launched a similar
platform – Shuidi Huzhu - three years ago and now has 75 million members,
according to DigFin.
Companies providing crowdfunding in the healthcare space are careful to
stress that these platforms are not insurance products to avoid
regulations. Instead, the platforms rest on the premise that small
amounts of money can be pooled into large sums. Thus, the platforms call
themselves “mutual aid” to identify it as a financial, not a financial product.
Ant Financial is looking to further disrupt the financial services
sector in China. Its current platform looks to provide payments for
medical procedures by pooling small payments from a large base of
participants. Unlike traditional insurance where premiums are paid
upfront for future protection, bi-monthly payments are made by participants to
cover previous payments. Such mutual-aid platforms may help to provide
insurance for a large swath of the Chinese population which may not have access
to such previously.
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Article Date: 1st July 2019.