Ant Group Co. will end a popular but controversial “mutual aid” service, which offered crowdfunded medical coverage to many ordinary Chinese citizens, but which was frowned upon by the country’s insurance regulator .
The financial technology giant controlled by billionaire Jack Ma said on Tuesday that it informed its customers that Xianghubao, its online self-help program, would cease operations after January 28.
The free service had more than 100 million users in 2020, but the numbers have declined this year after Ant came under heavy pressure from Chinese authorities to reorganize its business and fully comply with financial regulations.
Since its deployment three years ago, Xianghubao users have regularly paid small amounts of money to fund lump sum payments of up to the equivalent of about $ 45,000 to members diagnosed with serious illnesses such as cancer. and stroke, or who suffered life-threatening injuries. He said on Tuesday that a total of 179,127 participants have received benefits from the program.
“Over the past year, the welfare industry has undergone significant changes,” Xianghubao’s notice told users, adding that it is coming to an end “in order to protect the rights and interests of all. longer-term participants “.
He said that from Tuesday until January 2022, existing participants would no longer have to bear the costs of settling claims. These would be supported instead by the program itself, he added. Users have 180 days to submit claims for diseases diagnosed before Xianghubao goes out of business, and approved claims will also be paid by the program, he said.
China’s banking and insurance regulator warned in September 2020 that self-help programs run by several Chinese internet companies had similar characteristics to insurance but were not supervised as such and could present risks. for individuals and businesses themselves.
When Ant filed for IPOs in Hong Kong and Shanghai last year, the company warned in its listing prospectus that its support service could become subject to regulatory oversight and considered a commodity. insurance.
He also noted that there was a risk that participants would drop the service or refuse to fund higher payments for claims, and the company might have to cover any shortfall. Ant canceled its successful initial public offering in November 2020 and has restructured its consumer lending, credit rating and other businesses over the past year to meet regulatory requirements.
Ant earlier this year considered turning Xianghubao, whose name means “mutual treasure,” into a regulated company or commercial product overseen by China’s banking and insurance regulator, the Wall Street Journal previously reported.
The company’s decision to end the welfare program follows the shutdown of more than 10 self-help services, including those operated by food delivery giant Meituan, Waterdrop Inc. and Baidu Inc.
Xianghubao recently had around 75 million users, which is a drop of about 25% from the end of 2020. In its last payment in two weeks, 3,571 people received a total of 556 million yuan, or $ 87 million, for approved claims. The business was not profitable.
Existing users of the service will have the option to purchase regulated commercial health insurance plans on another Ant platform, with coverage provided by PICC Life Insurance Co. or Sunshine Life Insurance.
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