China May Regulate Online Health-Care Mutual Aid Platforms
China’s banking and insurance regulator is considering bringing the 5.4 billion yuan ($760 million) medical insurance-like online health-care mutual aid industry under regulation and require licensing for operators of the platforms.
The China Banking and Insurance Regulatory Commission (CBIRC) raised the idea Monday in an article published by an insurance industry journal. Online health-care mutual aid platforms are essentially commercial insurance providers, but there is no clear regulatory body or standards, said the CBIRC’s department in charge of cracking down on illegal financial activities.
Online health-care mutual aid programs have attracted more than 150 million participants in China in less than two years. The market is dominated by Xiang Hu Bao, introduced in October 2018 by Ant Group Co. Ltd., with more than 100 million members. About a dozen second- and third-tier players, including internet giants Baidu Inc., ride-hailing giant Didi Chuxing Technology Co. and a startup backed by Tencent, have jumped on the bandwagon.
Participants in such programs share the risk of becoming critically ill and collectively bear related medical expenses. On the Xiang Hu Bao platform, for example, participants with an eligible claim can receive a one-time payout of as much as 300,000 yuan. In 2019, each member paid 29 yuan. This year, Ant Financial capped member payments at 188 yuan — about the cost of two KFC bucket meals.
Platforms such as Xiang Hu Bao and Tencent-backed Shui Di Hu Zhu are not licensed like insurers, so risks involving the mass market cannot be ignored, the CBIRC said in the article. If not managed well, this could lead to social risks, it said. For the emerging industry, the regulator should conduct pilot tests, encouraging innovation while ensuring that risks under control, the regulator said.
As with busted peer-to-peer (P2P) lending platforms, there are also mutual aid programs that collapsed with more unpaid claims than healthy members remaining in the group.
Contact reporter Denise Jia (firstname.lastname@example.org) and editor Bob Simison (email@example.com)
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