Alibaba’s Xiang Hu Bao Crowd Insurance Model Could Work in Nigeria

Alibaba’s Xiang Hu Bao Crowd Insurance Model Could Work in Nigeria

This is a great idea for health insurance: crowd-insurance. Alibaba Ant Financial’s Xiang Hu Bao, which means mutual protection, has attracted 50 million people since its October inception. Simply, people crowd-insure themselves with no insurance company involved. U.S. Lemonade has something similar but not in health insurance.

The product operates somewhat like a collective, in which members contribute evenly to payouts of as much as 300,000 yuan ($45,000) when a participant falls critically ill. It’s free to sign up, there are no premiums or upfront payments, and disputes about claims are adjudicated by volunteer members, according to a statement from the company on Thursday. In return for managing the process, Ant will take an 8 percent administrative fee out of every payout.


The company’s foray into health care comes at a time when the country is grappling with a rapidly aging population, one of the more pressing long-term threats to the world’s second-largest economy. Ant said Thursday it hopes to sign up 300 million Xiang Hu Bao users within two years, which would represent more than 20 percent of China’s population.

Managing fraud? “Ant is using the same blockchain technology that underpins digital currencies like Bitcoin, which rely on common verification by members. Members who fall critically ill within 90 days of joining the plan will not be compensated.” They are bringing the tech elements together to deliver new business models.

I think with the deep distrust in the Nigerian insurance, crowd-insurance may be a good idea if the regulators will ever allow such. At least religious organizations and cooperatives can explore the model if platform-tech tools are available to power them. This is a great business to explore in Nigeria but focusing on churches, mosques and cooperatives which already have pre-existing trust infrastructure among themselves.

The insurance industry in Nigeria has used IT for productivity gains. Now is the time for the next level of innovation which is taking the insurance industry to the web. What they have been unable to do for decades – industry penetration acceleration – can happen if they digitize their products and make it possible for Nigerian entrepreneurs to participate via InsureTech. Should that happen, new products will evolve, and could actually deliver the aha moment that will make Nigerians begin to like buying insurance. The time is now: Nigeria needs a 21st century insurance industry.

LinkedIn Comment on Feed

A sort of an insurance model for esusu? Part of the motivation for contribution is that potential date to getting your returns on investment, once that element vanishes, many people could take off… The model can work well for middle-class settings, but what happens to children of the contributors?

Another twist, especially when it’s difficult to know who falls ill more often and who maintains better hygiene. Lots of things to outline. A good experiment worth doing, it can go either way.

Another Comment

Do you realise that that this is very similar to what is already done in the traditional village meetings? Just informally. Where everyone pays levies to the association and when a member is ill or deceased the association handle the cost up to a set amount. As long as the person’s own payment is up to date.


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