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The Wall Street Publication > Blog > Markets > Ant Group Closing Crowdfunded Medical Coverage Program
Markets

Ant Group Closing Crowdfunded Medical Coverage Program

Editorial Board Published December 28, 2021
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Ant Group Closing Crowdfunded Medical Coverage Program
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Ant Group Co. will wind down a popular but controversial “mutual aid” service, which provided crowdfunded medical coverage for many ordinary Chinese citizens but was frowned upon by the country’s insurance regulator.

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The financial technology giant controlled by billionaire Jack Ma on Tuesday said it has notified customers that Xianghubao, its online mutual-aid program, will cease operations after Jan. 28.

The free service had more than 100 million users in 2020, but the numbers have dwindled this year after Ant came under heavy pressure from Chinese authorities to revamp its businesses and fall fully in line with financial regulations.

Since its rollout three years ago, Xianghubao’s users have regularly chipped in small sums of money to fund lump-sum payments up to the equivalent of around $45,000 to members diagnosed with serious illnesses such as cancer and strokes, or who suffered life-threatening injuries. It said Tuesday that a total of 179,127 participants have received benefits from the program.

“In the past year, the mutual-aid industry has undergone significant changes,” Xianghubao’s notice to users said, adding that it is winding down “in order to protect the rights and interests of all participants in the longer run.”

It said that starting Tuesday and through January 2022, existing participants would no longer have to bear claim settlement costs. Those would be borne instead by the program itself, it added. Users have 180 days to submit claims for illnesses that were diagnosed before Xianghubao ceases operations, and approved claims will also be paid out by the program, it said.

China’s banking and insurance regulator warned in September 2020 that mutual-aid programs operated by multiple Chinese internet companies had insurance-like characteristics but weren’t supervised as such, and could pose risks to individuals and the companies themselves.

Last year, when Ant filed to go public in Hong Kong and Shanghai, the company warned in its listing prospectus that its mutual-aid service could become subject to regulatory oversight and regarded as an insurance product.


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It also noted that there was a risk that participants might drop out of the service or decline to fund higher payouts for claims, and the company might have to cover any shortfalls. Ant called off its blockbuster initial public offering in November 2020, and has been restructuring its consumer-lending, credit-scoring and other businesses over the past year to meet regulators’ requirements.

Ant earlier this year considered turning Xianghubao—whose name means “mutual treasure,” into a regulated business or a commercial product overseen by China’s banking and insurance regulator, The Wall Street Journal previously reported.

The company’s decision to shut down the mutual-aid program follows closures of more than 10 mutual-aid services, including those operated by food-delivery giant Meituan, Waterdrop Inc. and Baidu Inc.

Xianghubao recently had about 75 million users, representing a roughly 25% drop from the end of 2020. In its most recent two-week payout, 3,571 individuals received a total of 556 million yuan, equivalent to $87 million, for claims that were approved. The business wasn’t profitable.

Existing users of the service will be given 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.

Write to Rebecca Feng at [email protected] and Serena Ng at [email protected]

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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