On this scale, the contributions
-when they did have to be paid-remained small. When one Xiang Hu Bao participant, a girl from Shanghai who had suffered a head injury, needed an operation, 300,000 yuan was raised
for her. It only took 0.03 yuan each (this happened soon after the platform was created) - about half a cent. Another participant, an entrepreneur from Hangzhou (a city in southeast China), said he took out two "people's insurance" policies for his family at once, and pays about 50 yuan ($7.7) a year in premiums. Another, a farmer from a small town in eastern China, had raised about 30,000 yuan ($4,600) from members of the Shuidi Huzhu platform; he himself had previously spent about 15 yuan ($2.3) a year on contributions.
"I joined Xiang Hu Bao because I wanted to help people," said
a resident of southern Hunan province. - One or two yuan is not much. And I wasn't looking for any benefit for myself at all. But when I fell ill, it was good for me. When he was diagnosed with cancer, 100,000 yuan (about $14,000) was raised for him. He himself had spent about 4 yuan, less than $1, on contributions by then. Most of those
who used "people's insurance" were middle- and low-income people from small towns and rural areas. The creators of the largest platforms, Xiang Hu Bao and Waterdrop Mutual, admitted
that they were not profitable. However, according
to Ant Financial, such services are increasing people's interest in conventional insurance. According to surveys for 2019, about one in three Xiang Hu Bao participants were going to buy health insurance in the near future. Sales of companies that offered their products on Ant Financial's insurance platform increased by tens of percent after the launch of Xiang Hu Bao - and that, according to the creators of the "people's insurance," was its side effect.
The attitude of the authorities was generally favorable. The idea of mutual aid was endorsed
in some official documents. "Such a community is a positive addition to the social security system," the official press wrote
of one of the early projects.
The growing market for "people's insurance" required more resources from operators to verify applications. The creators of Xiang Hu Bao had recently been receiving about 2,000 applications for payments each week. Some users complained that checks on their cases lasted for months.
But last year, China began tightening control over the financial and IT sector (one of the reasons is the authorities' desire to limit the growing influence of large companies). This has also had an impact on attitudes toward "people's insurance. Last September, the Insurance and Banking Regulatory Commission called
the market for such services "wild", stating that they operate "in a gray area with no oversight". And that the situation
could turn out to be risky for both participants and companies.
In theory, the companies had an opportunity to resolve issues with the regulator - but they seem to have decided that it was easier to get rid of problematic services. In early 2021, Meituan announced
that it was shutting down such a project at its site (according
to the company, it had more than 10 million participants) and would "focus on its core business." Soon Waterdrop, an insurance company backed by Tencent, one of the largest investors in China, announced that it was stopping its own service
(it had existed for several years, had gathered 80 million participants and helped tens of thousands of them). Xiaomi
also announced its departure from this market. Several other platforms
did the same. Some offered participants compensation - like Waterdrop, the usual annual insurance at the expense of the company.
The Ant Group admitted
that they could also get rid of their service (according to the company, over several years, more than 116 thousand people received help there - for a total of $2.6 billion). But later it became known
from unofficial sources that regulators considered the closure of the largest "people's insurance" undesirable - there were fears that it could cause a "wave of social unrest". One possible option is to reformat the service and turn it into a regular insurance business.