The Wave of Mutual Aid Platform Shutdowns Five Years Ago Caused Widespread Misunderstanding of Mutual Aid—It Must Be Set Straight

Between 2020 and 2022, a group of online mutual aid platforms shut down one after another—from Baidu Denghuo Mutual Aid to Meituan Mutual Aid, and from Shuidi Mutual Aid and Qingsong Mutual Aid to Xianghubao—more than a dozen in all. Five years have passed, yet even today some still equate the shutdowns with the idea that "online mutual aid is illegal."

This wave of shutdowns had a profound and real impact on the critical-illness mutual aid industry. First, public trust was significantly affected—as one platform after another exited, many users grew doubtful about the mutual aid model, with "Will they run off with the money?" and "Is this a scam?" becoming common questions, and the willingness of new users to join declined. Second, industry cooperation became more difficult—banks, payment institutions, medical institutions, and third-party investigation firms, out of compliance concerns, generally took a more cautious attitude toward working with mutual aid platforms, making it harder to advance basic steps such as fund custody, case investigation, and medical verification. Third, the industry's scale clearly contracted—at its peak, participation across the industry exceeded 100 million, but after the wave of shutdowns the number of active members at surviving platforms fell sharply, new platforms all but stopped entering, and the industry entered a period of adjustment.

Precisely for this reason, it is especially necessary to clarify the true background of the shutdown wave. The shutdowns are a fact, but the reasons for them and the claim that "mutual aid is illegal" are issues at two entirely different levels. Unless this boundary is made clear, rebuilding trust in the industry is out of the question. This article sorts through the background of that time point by point to explain what the shutdown wave does and does not show.

I. Who exactly shut down?

Reviewing the list of shut-down platforms:

• August 2020: Baidu Denghuo Mutual Aid shut down after less than a year in operation, with fewer than 500,000 members;
• January 2021: Meituan Mutual Aid shut down;
• March 2021: Qingsong Mutual Aid and Shuidi Mutual Aid shut down;
• May to July 2021: 360 Mutual Aid, Xiaomi Mutual Aid, Sina Mutual Aid, and Wukong Mutual Aid exited in a concentrated wave;
• December 2021: Xianghubao announced it would cease operations in January 2022.

It is not hard to see that quite a number of the shut-down platforms were mutual aid plans under internet giants. Companies such as Baidu, Meituan, 360, Xiaomi, Sina, and Ant ran mutual aid businesses mostly as part of their ecosystem layouts, at some distance from their core main businesses.

When Meituan Mutual Aid shut down, Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, said at a press conference of the State Council Information Office: "Meituan Mutual Aid's deviation from Meituan's main business, together with rising adverse selection risk, was the main reason for its shutdown."

This statement shows that the exit of mutual aid plans under internet giants was closely tied to their own business structures and operating choices, and had no direct connection to whether the mutual aid model itself is legal.

II. Why did they shut down? Four real reasons

Beyond the strategic adjustments of internet giants, there were several other reasons for the shutdowns at the time:

First, some platforms adopted a front-loaded fee model, creating a risk of idle funds. Some platforms required members to deposit fees in advance upon joining, with the money left sitting in platform accounts. In 2020, the Bureau for Combating Illegal Financial Activities of the China Banking and Insurance Regulatory Commission noted: "Some platforms with front-loaded fee models accumulate idle funds and carry the risk of running off." This model faced considerable compliance pressure.

Second, adverse selection made operations difficult. Some platforms were relatively lax in front-end screening, so the proportion of non-healthy members rose, cost-sharing amounts kept increasing, and healthy users exited as costs climbed, forming a vicious cycle. This is an operating difficulty the industry commonly faces.

Third, the profit model remained to be explored. Mutual aid management fees are low, putting pressure on covering review and operating costs. Many platforms tried to supplement income through insurance conversion and similar means, and once the conversion results fell short of expectations, operations became hard to sustain.

Fourth, changes in the macroeconomic policy environment. At the end of 2020, a meeting of the Political Bureau of the CPC Central Committee proposed "strengthening anti-monopoly efforts and preventing the disorderly expansion of capital." In April 2021, financial regulators jointly summoned 13 internet platform companies engaged in financial business, requiring that all financial activities be conducted "with a license." Against this backdrop, internet platform companies generally reviewed and adjusted their quasi-financial and quasi-insurance businesses for compliance, and mutual aid plans were among the businesses adjusted.

Among these reasons, not one was that "the state deemed mutual aid illegal."

III. What did regulators actually say?

Some have interpreted regulators' "with a license" phrasing as a rejection of online mutual aid, but this reading is inaccurate.

In April 2021, at the CBIRC's first-quarter press conference, Xiao Yuanqi said: "If it is charity, let it be charity. If it uses the banner of mutual aid to engage in the financial or insurance business, it departs from the essence of mutual aid and needs to be corrected. All financial activities must be conducted 'with a license.'"

The key lies in the qualifier "uses the banner of mutual aid to engage in the financial or insurance business." What regulators were regulating was the conduct of using the name of mutual aid to actually carry on insurance or financial business, not the mutual aid form itself. Genuine mutual aid—which does not promise rigid payouts, does not set up a fund pool, shares costs after the event, and has members bear risk together—does not fall into that category.

By analogy: when regulators require that "driving requires a license," they are regulating unlicensed driving, not negating the legality of vehicles themselves. As long as the mutual aid model is not used to conduct insurance or financial business, it does not need an insurance license.

At the same time, it should be noted objectively: online mutual aid still has no clearly designated regulator or dedicated licensing path. This is a gap in which regulatory rules have yet to be put in place, not a determination that it is illegal. A gap and illegality are different in nature—the former means the system awaits improvement; the latter is a negative judgment on conduct. As of now, no law, administrative regulation, or regulatory document has declared online mutual aid illegal.

IV. In the same period, national policy kept supporting it

If the shutdown wave meant "mutual aid is illegal," it would be impossible to explain why national policy documents in the same period repeatedly affirmed medical mutual aid:

• March 2020: the CPC Central Committee and the State Council's Opinions on Deepening the Reform of the Medical Security System listed "medical mutual aid" for the first time as a component of the multi-tiered medical security system, on a par with basic medical insurance, commercial health insurance, and charitable donations;
• November 2021: the General Office of the State Council's Opinions on Improving the Medical Insurance and Assistance System for Major and Critical Illnesses explicitly proposed to "support employee medical mutual aid, regulate mutual aid on internet platforms, strengthen risk control, and guide the healthy development of medical mutual aid";
• August 19, 2026: the National Healthcare Security Administration's 15th Five-Year Plan for Healthcare Security for All proposed to "support the coordinated and orderly development of employee medical mutual aid and other forms of medical security";
• August 28, 2026: the Medical Security Law of the People's Republic of China was formally adopted, and Article 18 explicitly provides: "The state encourages the development of commercial health insurance, charitable donations related to medical security, medical mutual aid, and the like, to meet diverse health protection needs."

Internet giants shutting down their mutual aid plans and the state writing medical mutual aid into law and explicitly "encouraging its development" happened at the same time. This shows that at the policy level the state is concerned with regulated development, not with negating the mutual aid model itself.

V. Who survived?

During the shutdown wave, not all platforms withdrew from the market.

Platforms that adhered to post-event cost-sharing, set up no fund pool, and focused on the core of mutual aid continued to operate normally. KangAi Commune is one of them—founded in 2011, it has now operated continuously for fifteen years, through the industry's entire cycle of emergence, explosion, and adjustment.

The reason is this: under the post-event cost-sharing model, mutual aid funds are shared by members and paid directly to the recipient after an event occurs, and the platform holds no large sums of money, which fundamentally reduces the risk of idle funds; it does not use mutual aid as a traffic funnel, and its income comes mainly from management fees, giving it a relatively stable structure; focusing on the core business means operating decisions are not directly affected by a parent company's diversified strategic adjustments.

The shutdown wave pushed the industry from scale expansion toward rational operation. Different business models were tested by the market in this round of adjustment, and the platforms that survived were mostly those that kept deepening their mutual aid business and emphasized compliance and transparency.

VI. A simple analogy

During the rapid expansion of the shared-bike industry, many companies exited one after another, yet this did not lead anyone to negate the sharing economy model itself; it was seen as an industry shakeout and restructuring.

After the concentrated adjustment of the P2P lending industry, the value of combining internet technology with financial services was likewise not negated; instead, the industry was restructured through regulation, rectification, and licensed operation.

The same applies to online mutual aid. A group of platforms shutting down shows that the industry, after a period of rapid growth, entered a stage of adjustment and survival of the fittest—not that the mutual aid model itself has a problem with legality.

Looking back five years later, the shutdown wave looks more like an industry clearing: it pushed the industry from chasing scale toward emphasizing compliance and sustainability, with different business models each being tested by the market.

The claim that "online mutual aid is illegal" does not match the facts. On the contrary, in August 2026, medical mutual aid was formally written into national law.

The facts in this article all come from public sources, including transcripts of CBIRC press conferences, policy documents of the State Council and its General Office, the official text of the Medical Security Law of the People's Republic of China, and the shutdown announcements and public reports of the various platforms, all of which can be verified.

Recently, KangAi Commune released the KangAi Commune White Paper on Legal Operation and the 2026 Online Mutual Aid Industry White Paper. Click "read the original text" to view them.