Ali compensated for mutual treasure, and this trouble caused a lot of trouble

Everyone knows that Ali has received a ticket in the past two days.

If you look carefully, you will find that Ali is not just paying the ticket, but also something else. That is to deal with the mutual treasure problem.

After imposing a fine on Ali, it also required Ant Group to shut down the "mutual treasure" business carried out in violation of the law and compensate consumers according to law.

It should be said that Ali made a huge mistake in this matter, and this mistake stemmed from Ali's management's ignorance of the mutual treasure model.

Many people think that the mutual treasure model is regulated by the government, so it is forced to close, but I want to say that without the government's hand, the outcome of the mutual treasure model is the same.

Today, we're going to talk about the huge bugs of this model.

What is Mutual Treasure?

Mutual treasure, originally called mutual insurance, is a business jointly started by Ali and a life insurance company, with the help of this company's insurance license, Ali positioned it as a new type of Internet insurance business.

On September 6, 2018, Xinmei Life reported to the regulatory authorities the "Xinmei Life Mutual Insurance Society Mutual Insurance Group Critical Illness Insurance"; On October 16, the product was launched on the Alipay platform in the form of "mutual insurance and serious illness mutual aid plan". More than a month after its launch, the number of participants of the product is under the influence of Alipay, with more than 20 million people.

The essence of this insurance business is called mutual insurance.

Mutual insurance, what is it? In fact, everyone is familiar with it.

"One person is sick, everyone shares" is the essence of mutual medical insurance.

In fact, above history, people who encounter difficulties can always get all kinds of help, and these help does not come from private charity, but from another kind of thing, called mutual aid organizations.

You've attended weddings and funerals in China, and money is something that every Chinese has experienced.

This is a form of non-governmental mutual aid, when my family has difficulties, the whole village will help me solve them, is this charity?

No, it's a mutual aid, because when the other family is in trouble, you also need to be a follower, so that you can get help from an organization in times of difficulty.

The Chinese people adopt a conventional form of mutual assistance that does not require a contract. If you don't follow the crowd, you are despised by all, and he does it through moral restraint.

At the beginning of the development of the European business community, mutual aid organizations were the main form of guarantee for civil society.

Mutual aid organizations differ from charity, they are autonomous, mutually beneficial, designed to prepare for emergencies, they are not one group of people paying to help another group, but a model of mutual cooperation in society composed of equal people.

In the nineteenth century, British workers entering the cities developed national mutual aid organizations with hundreds of thousands of members.

What is the main responsibility of such a mutual aid organization?

Workers pay sick and retirement pay when they are unable to work due to illness, accident, or old age, provide health insurance for members of the organization, and even hold dignified funerals for the deceased, and provide financial and livelihood assistance for widows and orphans who have lost family members.

In 1801, Federic published a survey showing that there were 7,200 mutual aid organizations with 640,000 members in Britain, and the total population of Britain at that time was only nine million.

By the time the British government introduced compulsory government insurance in 1911, nine million citizens were members of registered and informal voluntary insurance associations.

In 1920, the Fraternity, the largest mutual aid organization in the United States, had 8 million members, accounting for 30% of adults over the age of 20 in the United States.

At the same time, there are many non-governmental self-help welfare organizations in the United States, from churches to clans and neighbors, and countless mutual aid organizations have been organized to deal with special situations.

Freemasonry, as Chinese is familiar, is actually a mutual aid organization, and in 1930, Freemasons accounted for 12% of American adult white men. Funeral, funeral expenses, illness expenses, etc., have a strong welfare protection function.

In 1929, Freemasons also provided housing for elderly members in more than ninety jurisdictions, and you see if the welfare is good or not, even the housing is covered.

In 1914, the average subsidy given to each member of the Masonic Housing Project exceeded $1,800, which was dozens of times the value of today's dollars.

In 1917, 45 of California's 59 fraternities offered sickness and accident insurance.

Mutual insurance is an insurance method developed by people based on the simple spirit of mutual help and the awareness of fighting risks.

So, is mutual insurance a good thing? No!

When the Chinese-style follow-up model becomes a European form of contractual mutual insurance, the model is doomed to failure. These institutions were closed early, the problem is not big, and if they are closed now, they may cause disaster for these enterprises.

What is the problem with the mutual insurance model?

To understand this problem, we must first understand the essence of insurance.

Private pooling money is a kind of mutual insurance, but is there a problem? Of course there are.

If all families have full moon wine, your family gives birth to one, his family gives birth to ten, and the money sent is the same, will you have a balance in your heart? It must be uncomfortable, and you will feel that you have suffered a loss.

If the other party also gives birth to only one, and you also give birth to one, everyone will feel okay.

You get married once, your colleague changes wives every third and fifth, and asks you to drink happy wine every day, are you comfortable?

Colleagues change frequently, you just entered a company, there are colleagues who have known you for a few days to send you happy posts, are you happy?

But the civil followers can overcome these problems, because they are all between relatives and friends, I suffer a small loss, why bother? After all, there is not much money.

However, when this mutual insurance becomes contractual insurance, these problems make mutual insurance unsustainable.

The modern insurance industry does not face such a problem because they follow the following principles:

First, modern insurance does not necessarily return after purchase:

If everyone buys an insurance product in return for consideration, then no one will bear the risk. And people who buy insurance don't want a return.

If everyone returns it, how will the commercial insurance company pay for the compensation of the person who had the accident? Then there will be no money to lose.

Second, insurance products need to segment the population and evaluate the risk of individuals to reduce prices.

How do insurance products compete in the market?

The most effective weapon is the price.

This insurance company protects the same diseases, the insured amount is one million, but the insurance is five thousand a year for one family and two thousand a year for the other, of course, two thousand is easier to occupy the market.

So how do insurance companies lower prices?

They take a method called segmentation of the population, and they assess the risk separately.

For example, if you are a person who likes fitness, then the price of your disease insurance can be discounted by seven, such as you are young, then your price can be cheaper, because the younger the lower the probability of getting sick, for example, you are a skydiving enthusiast, then your accident insurance I have to increase fivefold, because the risk is too great.

By segmenting the population, insurance companies can divide people with the same risk into a risk pool, and everyone will share their risk together.

As a result, the price of young people buying disease insurance and life insurance is cheaper, and those who like fitness buy disease insurance cheaper than those who don't.

This is good for insurance companies to win customers.

At the same time, he also brought another result, that is, everyone will not take advantage of each other.

Assuming that you buy accident insurance with the same premium and amount as a person who plays skydiving every day, then you must be taken advantage of by others because your risk is lower.

If you fall one, then your accident insurance will definitely become more and more expensive, then you are not willing to stay in a risk pool with such people.

You and another group of people who share your risk buy accident insurance for five dollars a year, while those who skydive are in another risk pool with people who engage in other extreme sports such as wingsuit flying, and they buy accident insurance for maybe fifty thousand a year.

Finally, there are also contradictions among extreme sportsmen, some people play 200 times a year, and some people only play once a year, what to do?

Then the insurance will be charged on a per-time basis, a thousand at a time, then the person who plays once in this way will not be cheapened.

So how do insurance products improve service quality and expand customer base?

It relies on a more accurate valuation of risk, a segmentation of risk groups, and even a segmentation of risk behavior.

Only then will he be able to get more and more people to accept his insurance products.

If a group of people who only give birth to one person give each other red envelopes when giving birth to children, it is equal, which is called everyone in a risk pool.

Third, insurance products also need to meet the law of large numbers.

What is the law of large numbers, the probability of risk must be calculated on the basis of a relatively large number, independent individuals, can not calculate risk.

It is often said that if you touch one in 100 million, you will touch 100%.

But if 10,000, a million, 10 million people, their risk factor can be calculated.

So insurance companies need to find enough customers to design a product.

If there are not enough quantities, it is impossible to develop products.

To give an extreme example, an accident insurance is only bought by two people, how to set the price? Suppose one person has 10,000 premiums and 100,000 sum insured.

If there is no accident, the insurance company earns 20,000, and if something happens, the insurance company pays 80,000. Insurance companies either make huge profits or lose blood, and such insurance companies cannot be opened. Driving and encountering an accident, it went bankrupt.

To continue business, you need a sufficient number of customers, which is called the law of large numbers.

Seeing this, can you understand the problem of mutual insurance?

Is Ali's mutual guarantee consistent with the above rules? Non-conformity.

First, Ali's mutual insurance, people with different risks pay the same amount of money;

In this case, the older ones take advantage and the younger ones suffer. Because the risk pricing of the two is not the same.

The older person is risky, but he pays as much money as the younger one. Therefore, most of China's crowdfunded mutual insurance is the first contact and favorite of young people, and then a small number of middle-aged and elderly people join.

Why is it so cheap?

The probability of young people who pay a lot of money is too low, and the small number of middle-aged and elderly people who pay insurance is shared by tens of thousands of times the cost of young people who are tens of thousands of times larger than them.

Such a cheap price has attracted a large number of middle-aged and elderly people to join, and at this time, more and more high-risk groups have appeared in the insurance pool.

Then young people find out how to pay more and more money every month. Because high-risk people run in to scowl the wool of low-risk people.

Just as you join the plan to give money to have a child, and suddenly a group of Africans who give birth to six or seven people, and more and more, then you send more and more money.

Over time, what will happen when the young people who pay today are old, and the base of new young people decreases? Your monthly share of expenses may be several thousand, because countless people are insured every day, which is far more expensive than commercial insurance.

Mutual treasure opened the "death spiral" mode a few years ago, healthy people gradually withdrew, non-healthy people are still in the plan, the future contribution amount will further rise, and the higher the increase, the fewer people will continue to pay, and the fewer people can be guaranteed.

So who still plays with it?

Later, a bunch of mutual aid companies collapsed not only because of regulation, but because they had already gone wrong at that time, a large number of middle-aged and elderly people joined, and young people withdrew because of the increase in the amount of contributions.

Mutual insurance has no risk classification, risk concentration outbreak, and in the end no one is willing to pay for it, of course, this kind of insurance is doomed to failure.

If it doesn't stop, young people's premiums will be higher than those of commercial health insurance in a few years. That's when the trouble is big.

Why? Because from the psychological point of view, there is a concept called sunk cost, I have paid for ten years, the higher the payment, the higher the premium, I am also paying, and now I want to let me have a protection benefit, but I need to pay more than the premium of commercial insurance, then they will inevitably be miserable.

They will treat past premiums as sunk costs.

At this time, the person who presides over this plan, if he wants to get out, it will not be so easy, because the cost of sinking is too high.

Second, after the regulator called a halt, mutual insurance was changed to a charity plan, called mutual treasure, so can this model be sustainable? Nor can it.

People's charity is limited, today to contribute some money to help others can be, but to ask me to contribute money every day, month by month, this will inevitably constitute a return mechanism, he is still mutual insurance.

Even if you write very clearly, the money you pay is to help others, and you cannot pursue returns, but your model is completely inconsistent with the charity model, he is the mutual insurance model, participants must pursue returns as the goal.

Because in the design of mutual treasure, you can only be eligible for a return if you pay money, which makes it impossible for him to transform into a charity program.

Charity programs, you must tell the participants that this is consumption, you have nothing in return.

Whether to compensate consumers for mutual insurance is a legal issue, it is worth studying by legal experts, if the contract is clear, the risks and obligations of all parties are stated, I personally think that it is not necessary to compensate.

But as such a large platform company in China, and a professional insurance company, I don't know anything about the consequences of this model, for the sake of goodwill, in order to restore consumer confidence, I think Ali's active solution to this matter is also good for his long-term development.

Summary:

In fact, mutual insurance is very common, but where everyone pays the same amount of money insurance, it is mutual insurance, and even everyone pays every month, what is it, you think for yourself.

Some mutual insurance is more troublesome and cannot be closed.

There are some things that are not insurance, also called insurance, such as is it a risk for people to get old? No, everyone will be old, how can it be called risk? None of them are insurance, and then it is unlikely to be as sustainable as commercial insurance.

The business model of mutual insurance is a very low-level insurance model, if it is a market-oriented development trend, they must move towards a commercial insurance model that subdivides risks and conforms to the law of large numbers.

The essence of the financial industry is risk pricing and risk control, and whether or not to control risks is the essence of all financial actions. However, in China, many people's understanding of financial business is basically equal to zero. This ignorance has also led to the prevalence of this kind of stuff in China today.

Ali's big team actually knows nothing about the risks of this model, after all, they still have to buy a big order for their ignorance of finance!

(Source: Ancient Nine Ancient Ten)