Alipay’s blockchain-based mutual aid platform Xiang Hu Bao has attracted over 100 million participants in the year since its launch. As of November 22, the platform provided financial aid to over 10,000 people.
Launched in October 2018, Xia Hu Bao, which translates to ‘mutual protection’, provides participants with a health plan against 100 types of critical illness. It is not a health insurance plan but complements premium health insurance plans with broader coverage. The risk is shared between all participants who bear the claims payouts collectively.
“We hope Xiang Hu Bao can support participants to help one another by providing a trustworthy platform in addition to the medical care protection provided by China’s social security and premium health insurance companies,” said Ming Yin, Vice President of Ant Financial.
Compared to traditional online mutual aid platforms, Xiang Hu Bao does not have any upfront payment or admission fees. Over two-thirds of its participants earn below RMB 100,000 ($14,000) per year, while a third of them come from rural China. The focus is on inclusivity.
“The majority of Xiang Hu Bao’s participants are from middle or low-income communities who are at great risk of falling into poverty if they become critically ill,” said Zhu Minglai, director at the Health Economics and Medical Security Research Center, Nankai University. Minglai added that Xiang Hu Bao enabled low-income communities to receive essential health protection.
A survey by the Nankai University revealed that 10% of the participants had no other health plan except Xian Hu Bao.
Traditionally, claims processing is relatively expensive and eats into funds available for health benefits. And fraud prevention is critical. In this case, participants can file supporting evidence of their claim using the Alipay app. Alipay’s proprietary blockchain powers the entire evidence submission process. Approved claims result in a one-time payout of up to RMB 300,000 ($43,000), the cost of which is equally shared between the participants.
While the idea is appealing, it is not without risk as with any p2p platform. For example, if there is a massive volume of claims, the members could have to make significant financial contributions to other people’s treatments. However, for 2019 Alipay capped the exposure to 188 RMB ($26). A spokesperson told Ledger Insights that the average 2019 payment is expected to be around 30 RMB ($4.20) and there won’t be a cap in 2020. Alipay partially addressed the level of claims by limiting the age of patients to 59.
Although the system has altruistic aims, it also offers AliPay the opportunity to upsell participants to full medical insurance plans.
Ledger Insights previously reported on Xian Hu Bao when it hit the 50 million user mark. The platform aims to attract 300 million users in two years.