Some Companies Shut Down Their Mutual Aid Operations Mainly Out of Profit Considerations

In the early days, mutual aid platforms found it easy to grow their user base. Because mutual aid members mostly care about health and have an awareness of protection, they could easily be converted into insurance customers. This was a business strategy, and it succeeded.

Now the insurance-conversion value of mutual aid platforms has disappeared, for three reasons. First, the existing users have already been developed. Second, as cost-sharing rises, acquiring new users on mutual aid platforms has become harder. Third, regulators require platforms to draw a clear line between insurance and mutual aid. The third reason in particular affects a company's compliance and its plans to go public, so mutual aid platforms take it very seriously—after all, there is far more to gain from an IPO.

But if mutual aid is not monetized through insurance sales, the returns of the mutual aid platform itself are negligible, and making big money is nearly impossible. Operating mutual aid is also extremely difficult, with a low input-to-output ratio.

It is precisely these profit considerations that have led many companies to exit the mutual aid business.

Some people say it is because regulators demanded the shutdowns. There is no basis for this. Academia has extensively discussed, and reached consensus on, how mutual aid differs from insurance. Beyond risk warnings about the differences between mutual aid and insurance, regulators have never explicitly or implicitly required a shutdown; moreover, to our knowledge, the relevant authorities have been continuously researching regulatory approaches for the mutual aid industry. It is unfair to lay the blame on the regulators.

Needless to say, shutting down at will is highly irresponsible. It damages users' trust and deals a blow to the entire industry. Only a sustainable mutual aid sector is truly responsible to users, and we hope platforms will weigh their decisions with the utmost care.