China's Alibaba Suspends Operation of Medical Expense Mutual Aid Service Xianghubao

Chinese Authorities' Medical Expense Collection Method When Needed Is 'Quasi-Insurance,' Not Insurance
75 Million Xianghubao Subscribers... Meituan Huozhu and Denghuo Huozhu Also Previously Suspended

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Xianghubao, a medical expense mutual aid service affiliated with Alibaba Group, will cease operations.

According to Chinese media such as Sina on the 29th, Xianghubao, a medical expense mutual aid platform operated by Ant Group, Alibaba's fintech subsidiary, announced that it will stop operations on January 28 next year.

Launched in 2018, Xianghubao does not operate like a typical insurance product where a fixed amount (premium) is paid in advance for a set period to receive agreed coverage. Instead, when a subscriber requires medical expenses, the other subscribers pool money to support the needed medical costs. It is reported that Xianghubao has about 75 million subscribers.

In the first year after Xianghubao's launch, the average payment made by each subscriber was 29.17 yuan (approximately 5,400 KRW). Although the subscriber burden gradually increased afterward, the maximum annual burden was capped at 188 yuan (about 30,000 KRW). Since its launch, around 180,000 subscribers have received medical expense support through this service.

Chinese media reported that the China Banking and Insurance Regulatory Commission classified Xianghubao as a "quasi-insurance" rather than insurance, which led to the suspension of its operations. Previously, more than ten large internet medical expense mutual aid services, including Meituan's Meituan Huzhu and Baidu's Denghuo Huzhu, also ceased operations.

Sina added that while medical expense mutual aid services were created to address the problem of information asymmetry faced by people, this information asymmetry later caused side effects that increased the burden on subscribers.

This content was produced with the assistance of AI translation services.