On October 16, 2018, Ant Financial — an affiliate company of the Chinese Alibaba Group – teamed up with Trust Mutual Life Insurance Company to launch a very innovative health insurance plan, named "Mutual Protection." Members would be paid an insurance benefit of CNY300,000 (US$43,428) upon being diagnosed with cancer or any one of the 99-plus critical illnesses. The cost of becoming a Plan member is nil...
As a former life insurance executive and actuary, I could not help but ask myself some burning questions:
- How would the Plan manage the most critical risk aspect in life and health insurance, that is, adverse selection by high-risk customers?
- If the percentage of high-risk members (e.g., ill or old) is much higher than what the company had expected, how would the cost to be shared by low-risk members (e.g., healthy and young) remain reasonable and acceptable?
- The Plan seemed to guarantee insurance coverage renewability till age 60. How about coverage after 60, when the need for health insurance would become even stronger?
- Is this a health insurance product or in essence a P2P health insurance platform?
- Is the new Mutual Treasure an insurance or not?
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