Ant Group to Shut Down Crowdfunded Medical Aid Service

The decision to close the world's largest mutual aid platforms comes as restrictions on the financial technology industry continue
Jan. 01, 2022 10:00
Ant Group to Shut Down Crowdfunded Medical Aid Service

(CapitalWatch, Dec. 31, Hong Kong) The Alibaba (NYSE: BABA; HKEX: 9988) affiliate Ant Group announced plans to shut down its online crowdfunded medical aid service Xianghubao next month as fintech regulations continue to clench in China.

The company said its decision to end the service on Jan. 28 is in response to changes in the country's mutual aid industry and to protect the interests of users. 

Xianghubao is the world's largest mutual aid platform, and provides its users with a basic health plan covering some types of critical illness. The service is free to sign up for, and members share the medical costs of other users. The South China Morning Post reported that platforms like Xianghubao are popular in low-and middle-income rural households in China with limited access to medical care; through this service, users pay an average of less than the cost of a Starbucks coffee in Shanghai.

Beijing has kept a close eye on Ant amid its efforts to curb the technology sector's influence on financial services. Ant was forced to pull its massive IPO in November 2020 by regulators, and Xianghubao memberships have declined since then. The China Banking and Insurance Regulatory Commission proposed tighter regulations on online sales of insurance products in 2020, and several companies have exited the field over the past year. 

In August 2020, Baidu (Nasdaq: BIDU; HKEX: 9888) shut down its mutual insurance platform Denghuo Huzhou after just one year and food delivery company Meituan (HKEX: 3690) shut its Meituan Huzhu mutual aid platform earlier this year after 18 months in operation. Tencent-backed (OTC: TCEHY; HKEX: 0700) insurance tech firm Waterdrop Inc. also closed its mutual aid business in late March.

Xianghubao has been a leader in the mutual aid industry, having serviced over 100 million members and funding treatment for around 180,000 users since its launch in 2018. After the program is discontinued, the company said existing users will be able to purchase commercial health insurance products on Ant Group's platform supplied by PICC Life Insurance Co. and Sunshine Life Insurance.