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How Ant Financial is disrupting insurance

The supercharged take-up of Xiang Hu Bao-an initial insurance product converted to an online mutual-aid platform- shows the power of digital finance.



Nineteen days after joining Xiang Hu Bao, Ant Financial’s online mutual-aid network, your correspondent had contributed to financing medical support for nine people fighting disease. The cost she bore was only Rmb 0.05 (US$0.007) for all nine policies, with no fee to sign up.

But adding up the contributions from her and lots of other people on the network enabled those nine people to claim a one-time payout of up to Rmb300,000 ($44,500), valid against about 100 diseases.

For traditional insurance companies selling critical-illness cover, Xiang Hu Bao is set the change the landscape, just as Ant’s YueBao rocked the world of money-market funds. Whoever joins Xiang Hu Bao is eligible for one-time cash payouts, with the entire membership – now at 55 million people – sharing the cost.

Payouts are calculated based on cases submitted, and that sum in turn determines the twice-monthly premiums that members must put in – rather than the traditional business model of paying expensive premiums up front for the promise (often qualified) for future protection.

Whereas a traditional insurer would use premiums to build an investment fund, to generate returns for future obligations as well as to earn a return for the company, Xiang Hu Bao operates on a pay-as-you-go basis.

And Ant Financial takes a 8% management fee out of the pot on all claims paid.


The business model of Xiang Hu Bao comes from an affiliated partner, Xinmei (Trust Mutual Life Insurance).

In 2015, together with seven other external partners and Tianhong – YueBao’s manager, Ant set up Xinmei. In May 2017, Xinmei got approval from China Insurance Regulatory Commission and was officially licensed as the country’s first mutual life insurance organization. 

When Xinmei and Ant jointly launched Xiang Hu bao in October 2018, it was not smooth. Xiang Hu Bao took off as an insurance platform built in the Alipay app, with Xinmei to guarantee the payouts.

Traditional insurance companies in China, shocked by the microscopic premiums, complained about what they said were dishonest practices. The China Banking and Insurance Regulatory Commission (CBIRC) then fined Xinmei and its founder, Yang Fan, Rmb900,000 for misleading sales: he had initially told the public that first-year premiums would be around Rmb200. But CBIRC concluded that the premiums were actually very uncertain. (Xiang Hu Bao got its first claim in March which meant the premiums for the first five months were zero.)

Ant moved quickly to quash any political problems and “updated” the product in November, removing Xinmei from operations and repurposing the platform as a mutual aid program.

“The platform is now only a mutual-aid program,” an insurance broker explained to DigFin. “It clearly states ‘We do not promise that you can obtain certain risk protection.’” 

The platform’s name was also changed, swapping characters for “mutual insurance” to “mutual treasure” (the pinyin version remains the same). Ant also set a ceiling on first-year fees of Rmb188, promising to cover any payouts in excess.

Taking off

The clarification hasn’t blunted the popularity of the platform, which is on track to gain its first 100 million users far more quickly than Ant Financial’s other financial services, such as investments (Yue’Bao) and credit scoring (Zhima Credit). A Xiang Hu Bao spokesperson says the company expects to have 300 million users, or more than 20% of China’s population, signed up within two years.

Like with these other services, Ant is creating a digital financial service that meets users’ needs for medical coverage. It operates in a country where many people can’t readily access or afford traditional insurance. By creating a method for people to pay micro-premiums – efficiently and at scale because it’s digital – Ant is expanding the insurance pie beyond what traditional carriers would ever go after.

Risk control

Xiang Hu Bao is built in the Alipay app.But not everyone in the Alipay universe is eligible to join Xiang Hu Bao, there are two hurdles.

First, membership requires a credit score of at least 650. The score ranges from 350 to 950. A credit above 600 is seen as excellent, suggesting that the person is an active consumer in Alibaba’s e-commerce centre Taobao and always pays his bill in time. This bar both reinforces the commercial drivers throughout the Alibaba universe and minimises the fraudulences. These members also can surely afford the monthly premium.

We use a consortium blockchain to link the notary office and the e-certification center

Ant Financial’s spokesperson

Secondly, Xiang Hu Bao only accepts members without pre-existing conditions, no record of continuous medication over a 30-day period, and they must be below the age of 50. People in their 40s can claim up to Rmb100,000, while younger members can claim up to Rmb300,000.

To mitigate fraud, members submit claims and supporting evidence via the Alipay app, with a blockchain keeping track of identities.

“We use a consortium blockchain to link the notary office and the e-certification center,” said the service’s spokesperson. “All the documents in the chain have legal effect and can’t be modified.” Ant has even built its own judicial system, with members eligible to service on juries that review the most controversial cases: today there are some 800,000 people in China serving on the jury. (Your correspondent applied but failed the exam.)

Wechat’s stance

Xiang Hu Bao is not the first online mutual-aid society in China. Three years earlier, Alibaba’s rival Tencent launched a similar platform, now with 75 million members. Its service, called Shuidi Huzhu, recently raised Rmb500 million ($74.4 million) in a Series B round, led by Tencent itself.

But Ant’s version has been growing much more quickly, possibly because of its very different approach. Shuidi Huzhu leveraged WeChat’s strong social network. But Shuidi’s means of fundraising from members involves lots of sob stories circulated throughout WeChat, making it more of a charity appeal.

Ant, on the other hand, has been clear that Xiang Hu Bao is a financial product. It initially stumbled over how it defined “insurance”, but the product’s design, which obviously has widespread appeal, has carried the business through its being fined.

For traditional insurers, even in China, Xiang Hu Bao is not yet a direct threat. Its micro-payments model means it is creating a new market from consumers that a traditional insurer doesn’t try to reach – because such a market is too expensive for a paper-based, product-centric insurer to contemplate.

But Ant Financial will be looking to role out Xiang Hu Bao throughout emerging markets worldwide. It will be growing scale and using the service to reinforce payments and other financial services. How long can traditional insurers expect to remain comfortably ensconced in their current markets with their current business models? Or is now the time to attempt new digital businesses of their own…before it’s too late?


SingLife takes on insurers…banks…Revolut…

Insurers want to join ecosystems. Can the insurer become that ecosystem?




Walter de Oude, SingLife

Think “insurtech” and one thinks of a scrappy startup taking on the traditional AIA/Prudential/Allianz incumbents’ mob. And SingLife is trying to do that, along with digital insurers such as Bowtie, Blue and (in part) FWD.

SingLife has just rebranded. It was until now “Singapore Life”, a traditional insurance brand with lions in its logo and everything. Now it’s styling itself as a tech company, and it’s pursuing a business model that is redefining what insurtech can be.

Walter de Oude, SingLife’s CEO, has broader ambitions. The firm has just issued a Visa-approved debit card that makes it a competitor to money-market funds, to bank deposits, and to fintech companies like Revolut.

It’s a twist on the current drive by many insurance companies – be they startups like Bowtie or traditional players – to be part of an ecosystem. The argument goes that insurers need to tie themselves to something bigger, a bank or a virtual bank, in order to access new customers.

But what if the insurance company becomes the center of the ecosystem? That’s what SingLife is trying to do.

Not just direct-to-consumer

De Oude explains that, first of all, SingLife is only partly digital – that’s its direct business. But direct accounts for only about 25% of its premiums sold (to about 15,000 customers). The majority comes from a very traditional advisory business that caters expressly to global rich individuals who want to bank – and insurer – in Singapore.

It’s de Oude’s view that a digital-only insurer is destined to fail because there are still too few people willing to use it. This is likely to change, but for now, for the business to succeed it still needs agents out there wooing customers.

That provides a stable base from which SingLife can pursue its more digital ambitions. But digital sales require an ecosystem to develop scale. Instead of attaching the brand to, say, an e-commerce platform that owns the customer, SingLife is trying to attract people.

Enter the Visa card.

“We can give customers a 2.5% yield on their premium,” de Oude says. Allowing customers to earn something on the money they give the insurer puts it in competition with bank accounts (which typically offer negligible interest) and with money-market funds.

“Just a debit card”

The advantage that deposits and funds have is that customers can withdraw cash any time, whereas a premium placed with an insurance company is locked in.

So SingLife’s card – and the mobile app affiliated with it – allows people to treat their premium as something that can be spent. “It’s just a debit card,” de Oude said. “It lets you save, or tap the card or use your phone to spend the money or transfer it back to your bank account. And I’ll give you commission-free foreign-exchange, and an unemployment benefit” commensurate with how much people spend with the debit card.

The idea is to create a reinforcing spiral. People buy an online insurance policy partly to get a card, against which they can spend the value of that premium, get additional insurance, and get Revolut-like benefits.

If people like the experience, they’ll use that card to spend more…until they hit the end of their premium amount, at which point they have to re-up. SingLife, meanwhile, charges a fee per transaction (which goes to fund its unemployment insurance benefit), and moves clients who max out to other offers beyond the basic 2.5% return program, with longer term premiums that can in turn be converted into spending programs.

SingLife will also offer a metal card to bigger spenders.

DIY ecosystem

But, de Oude contends, SingLife is not engaging in banking activity. It is not taking deposits or making loans.

“Revolut’s not a bank,” de Oude said. “They’re managing money.” He says he’s putting a similar activity on top of the insurance business. “We’re not accepting deposits; we’re investing your insurance premiums.”

And Singapore government backing for insurance contracts, on average, exceeds its S$75,000 deposit insurance.

To make this work the firm will run a liquidity fund, in order to meet customer spending off their premiums. But de Oude is betting that the attractiveness of a yield plus the other benefits will encourage customers to keep their money with SingLife.

This is SingLife’s strategy to build a similar kind of funnel of customers that digital insurers would otherwise get by teaming up with a Big Tech company, e-commerce platform or conglomerate.

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Aegon Life goes all-in on digital for India

The insurer is immersing itself with major Indian tech partners in a move to reinvent the business model.




“Insurance sold through digital platforms is here,” said Curtis Chen, chief strategy officer and head of business development at Aegon Asia.

But how this plays out remains up for grabs: “How big a disruptive force will it be for insurers, how big will insurance be for ecosystem platforms, and who will dominate?”

Insurance companies are jostling for position among Big Tech, e-commerce companies, and superapps. “Everybody’s chasing new platforms, including us,” Chen said. “It’s about how you make a partnership work.”

The Hong Kong-based Chen made these remarks from stage at a recent Finovate conference, where he outlined how Aegon is going all-in on digital in the region, starting in India, where it is licensed to do business in life and health.

Aegon is a nobody in that market, at least as far as retail-facing business is concerned, ranking 22nd out of 23 licensed life insurance companies. It has nothing to lose so it is putting all of its chips on the table in a bet on total digital immersion.


Because it has no agency force or other channels in India, Aegon has no conflicts of interest, so it can commit itself wholly to e-commerce and other partners.

This is why leading Indian technology companies including Paytm (digital payments) and MobiKwik (mobile phone wallets), as well as child-focused platform called FirstCry, have backed Aegon’s new business, which has just launched in the country with licenses for life and health insurance, with protection and wealth management on the horizon. (A fourth partnership with a leading Indian e-commerce company is also in the works.)

For Ageon, this is a turn away from the usual corporate strategy of accelerators and innovation labs, which Chen argues have merely wasted money. Instead, the insurer is embedding itself with a variety of tech companies. “That’s the only way we’ll transform,” he said.

The right partnership brings something to customers they can’t find among incumbent insurers

Curtis Chen, Aegon Asia

The trick though is to work out what parts of an insurance policy’s lifecycle to leave in the hands of a partner, what parts to retain, and where both can combine to add value.

“The real magic happens in the intersection of how we use data to take risk, or to position a product, or do customer onboarding,” Chen said, “and the digital partner’s proxy data, and insight into purchase patterns. That could be a useful, compelling proxy for what insurers do traditionally.”

Some functions like marketing and lead generation are best left to e-commerce partners, while insurers should remain in charge of risk, asset-liability matching and reinsurance. But other areas can benefit form combining both parties’ expertise, such as claims service.

“We don’t have this all figured out, but the right partnership…brings something to customers that they can’t find among incumbent insurers,” he said.

New operating model: all about scale

“The new operating model has to be 70% to 80% different, not 80% the same,” Chen said, capable of far better customer service at a much lower operating cost.

“If your unit cost today is X, you need to think X divided by 100, or X divided by 500, and create something so scalable that we can deliver service at a cost no traditional insurer can imagine,” while also constantly innovating, he said.

That means serving far more people with a lot more policies, even if those ticket sizes are also miniscule.

But it also means the insurance company needs to figure out its value proposition in these ecosystems. If Aegon is merely providing balance sheet, how does it protect its brand? How does it ensure the values the company stands for are embedded in the new venture?

If India is a success, Chen says the model can extend to other Asian markets where Aegon has a license but is a small player.

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Blue adding more Tencent tech

The digital insurer is gradually adopting more of its shareholders’ capabilities.




Charles Hung, Blue

Blue launched a year ago with a simple front end, some simple protection products for critical illness, and a lot of hype. Although it trades on the traditional life-insurance license of shareholder Aviva, Blue launched as a digital-only business, at least on the distribution end.

(Read here about Bowtie, the city’s first digital-only licensed life insurer.)

Expectations for a new company backed by Tencent, Aviva and Hillhouse Capital ran high in the fintech industry. The backing of Tencent, in particular, had traditional insurers nervous.

They relaxed after Blue launched. Executives at several firms have told DigFin the first iteration of Blue was a little underwhelming. The claims process, for example, involves printing out forms – hardly an insurtech triumph.

Moreover, people in traditional industry look at traditional metrics. By that light, Blue hasn’t moved the dial. In 2018, Aviva (the license under which Blue operates) sold 1,375 annual-payment non-investment life policies, with a total premium of HK$1.3 million ($167,000), according to the Hong Kong Insurance Authority.

The likes of AIA, Prudential and HSBC Life sold upwards of 385,000 policies each and generated payments of over HK$16 billion ($2 billion) each – plus more in monthly-premium sales (another HK$15 billion in AIA’s case).

Brand building

But that was a year ago. Blue is beginning to broaden its product set, improve its financial operations, and most importantly, embrace more technology. In short, it continues to leverage its three shareholders to forge a new kind of competitive insurance business.

Charles Hung, Blue’s CEO – a former head of risk at Aviva – acknowledges that the company’s traditional stats are nothing to brag about. The company doesn’t represent a threat in terms of policies sold, manpower (it doesn’t run an agency force), or APE (annual premium equivalent, the formula to compare insurers’ various types of premiums sold).

“We follow impressions, site visits, traffic volume, and customer engagement,” Hung said. “Brand recognition is important.”

On this front, the chief exec is happy to share statistics. “We’ve had 300 million impressions, 1 million site visits, and three to four million engagements via social media,” he said. That’s netted about 80,000 new accounts and the thousand-plus policy sales.

Moreover the company’s offering focuses on protection, whereas many traditional metrics rely on investment-linked business.

“The 7 million people in Hong Kong – that’s our benchmark.” Hung said, referring back to marketing and awareness.

Front-end iteration

What about the fundamentals of the business’s set up, though? For example, the heavy paperwork for the claims process? This is something traditional players already automate better. Is Blue using this as just a way of pushing KYC to the end of the product cycle?

Hung disputes that characterization. “Most KYC is on the front end, using facial recognition and OCR [optical character recognition]. But certain criteria require a manual query,” he said.

He says the firm has been constantly working on the front end.

Over the past year it’s made 150 changes based on how customers interact with the site and mobile app: things like placing the icon, the color scheme, fonts, the wording. This is the sort of granular iteration that tech companies use to build a better mousetrap.

You’re going to see more in the way of A.I. and chatbots

Charles Hung, Blue

The company has also launched a claims service that gives customers information about their submission, in case they are missing information, and to update them on the payment’s status.

But bigger, if less visible, changes are in store.

Leveraging the shareholders

First, Blue is about to launch its first non-protection product. Citing regulatory concerns, Hung declined to specify the type of product, or confirm whether it’s taking Blue towards the kind of savings or investment-linked policies that would put it in head-to-head competition with the big incumbents.

Second, it is in discussion with Hillhouse about internal asset management. All insurers need to invest the premiums they receive, a task made difficult in today’s environment of low interest rates. Hung declined to comment further on this, but it suggests the business is reaching the point where it needs to think more strategically about financial operations.

Third, it has obtained regulatory approval to move its tech stack and data to Tencent’s cloud.

“That will improve our turnaround and let us react quickly,” Hung said. “Within the next few weeks, we will be on a new platform for our back end. Meanwhile, incumbents are stuck with old legacy systems with high operating costs.”

We need to be part of a consumer’s life

Charles Hung, Blue

By shifting to a cloud-based tech stack, Hung says the insurer will be able to roll out more innovations quickly. “You’re going to see more in the way of A.I. and chatbots,” he said.

For example, the insurer has been experimenting with personalization. It’s done so using IBM Watson’s deep-learning tools behind a game it launched on WeChat (the messaging and gaming platform of Tencent). The game has nothing to do with insurance, but it’s a way to learn how to personalize responses to customer inputs.

The company is also starting to learn how to use data.

Data and partnerships

For example, Hung says the most surprising takeaway is that the majority of its customers are male. Traditionally protection products are mostly sold to females. Then there are other patterns emerging, such as enquiries from elderly people, or more business during mornings than afternoons.

“We need to turn this information into opportunities,” Hung said.

What about that WeChat relationship? Blue has a business account on the platform – but so does everybody else. Is it getting any special treatment? Can its parentage give it an edge?

So far, the answer is no, although Hung says he’s still looking at possibilities. Blue is constrained because it isn’t licensed to sell policies to people outside of Hong Kong.

“I can’t say what we’ll do,” Hung said, “but there will be stronger integration – like our use of facial recognition technology or cloud, which are Tencent technologies.”

He is also looking at broadening Blue’s reach via partnerships, including with virtual banks. Tencent holds a stake in on Hong Kong licensed VB, called Fusion Bank, along with ICBC. Is that going to be a home for Blue?

“It’s still early days for the virtual banks,” Hung said. “We’re interested but it’s too soon.”

But he’s working on the broader question of an ecosystem.

“Insurance is traditionally sold, not bought,” Hung said. “To change that we need to be part of a consumer’s life, integrated into what they do on a daily basis. The normal way would be to tie up with medical associations or pharmacies. But there’s also lifestyle ways to leverage customers. The sky’s the limit.”

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How Ant Financial is disrupting insurance