(ECNS) - Mutual insurance product "Xianghubao", jointly launched by Trust Mutual Life and Alibaba's financial arm Ant Financial, has become hugely popular in China, attracting 3.3 million policy holders in three days.
The mutual insurance program allows a group of policyholders to share the risk and expense of insurance policies. For example, if one of 100 policyholders in the program becomes ill, he or she can receive the entire lump sum payment, while the cost is shared by other members in the group collectively.
Users with Sesame Credit points of 650 and above can participate in the program free of charge. Paying a certain premium every month, they will enjoy insurance coverage for 100 major illnesses, including malignant tumors, with a financial claim from 100,000 yuan to 300,000 yuan.
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.
Zeng Zhuo, chief actuary of Trust Mutual Life, said considering the lower probability of serious illness, a policyholder is estimated to pay between 100-200 yuan in the first year.
In comparison with online mutual assistance programs, the product has secured the approval of China Banking and Insurance Regulatory Commission and adopted blockchain technology to prevent any data tampering, Zeng said.
Despite its popularity, Yin Ming, president of Ant Financial's Insurance Business Unit, said Xianghubao was in no way designed to be an alternative to critical illness insurance because in reality the actual medical costs were far higher than the maximum claim of 300,000 yuan. In addition, Xianghubao policyholders should be less than 60 years old, he added.
