China's Ant Financial amasses 50 million users, mostly low-income, in new health plan

[April 12, 2019]  SINGAPORE (Reuters) - A mutual health aid plan launched by Ant Financial Services Group, the dominant fintech player in China, has amassed more than 50 million users and is aiming for 300 million within two years, the company said late on Thursday.

The plan, dubbed Xiang Hu Bao or literally "mutual protection", is marketed on Ant Financial's flagship mobile payment app Alipay and provides participants a basic medical coverage with the risks and expenses distributed across all members.

It has gained unexpected popularity among China's "low-end population", poorer sections of society, who struggle to afford medical services due to the government's inadequate social healthcare system and are under-served by traditional commercial insurers as they cannot meet the premiums and advance payments required with commercial health insurance products.

About 47 percent of Xiang Hu Bao plan's 50 million participants are migrant workers and 31 percent are from rural areas and county-level regions, Ant Financial said.

Chinese billionaire Jack Ma's Ant Financial was spun off from e-commerce giant Alibaba Group Co Ltd, which went public in 2014, and has played a vital role in shaping the financial technology landscape in China, shaking up the state-controlled traditional banking, asset management and insurance sectors with disruptive new products.
The expansion of Xiang Hu Bao was even faster than Ant Financial's blockbuster online spare cash management platform Yu'e Bao, which took more than six months to reach the 50 million user milestone after launching in 2013 and has grown to become the world's largest money market fund with 1.13 trillion yuan ($168.2 billion) in net asset as of end-2018. China has a population of nearly 1.4 billion.

The Xiang Hu Bao health plan protects participants against 100 critical illnesses with a one-time payout of up to 300,000 yuan ($44,650). The cost is shared equally by all other participants, capped at 188 yuan per month for individual users in 2019, according to its description.

Despite its mutual insurance features, Ant Financial said the plan is "not a health insurance product", indicating the product is not regulated by the country's insurance regulator.

Ant Financial has obtained a range of licenses to operate financial services, including payments, online banking, insurance, micro lending, and fund management in China's vast financial market. Its rapid expansion has propelled regulators to place it under increased scrutiny to prevent potential systematic financial risks.

(Reporting by Shu Zhang; Editing by Jacqueline Wong)

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