Alibaba's financial arm Ant Financial and Trust Mutual Life have launched a mutual health insurance product named Xianghubao, which has attracted more than 8m subscribers in the eight days since 16 October, when the product made its debut.
Those allowed to subscribe to the mutual plan should be in good health and aged between 18 and 59. They can include their non-adult children in the plan. They enjoy insurance coverage for 100 major illnesses, including malignant tumors. The cover is CNY100,000 ($14,400) for subscribers aged between 40 and 59; and CNY300,000 for those younger than 40.
Users with at least 650 Sesame Credit points can participate in the programme free of charge. Sesame Credit, a credit scoring system backed by Alibaba, has been widely applied by the e-commerce giant in a broad range of services from renting a car to applying for loans.
Subscribers will share equally, irrespective of their age, the costs of insurance payouts and management fees only when claims are lodged. The management fees, amounting to 10% of a payout, are payable only when a claim is filed.
Under Xianghubao, public announcements are made twice a month about claims. Objections can be raised against the claims. If there are no objections, the claim payment will be made.
Zeng Zhuo, chief actuary of Trust Mutual Life, said considering the lower probability of serious illness, it is estimated that a policyholder would pay CNY100-200 in the first year.
The product has secured the approval of CBIRC and uses blockchain technology to prevent data tampering.
Despite its popularity, Yin Ming, president of Ant Financial's Insurance Business Unit, said Xianghubao is not designed to be an alternative to critical illness insurance because actual costs of treating major illnesses are often much higher than the maximum claim of CNY300,000.