Date: March 11, 2021

Time: 15:30 pm

Venue: Room 0411, Teaching Building 0#, Jiuli Campus

Event Details:

Lecturer: Professor Wu, Wenfeng

About the Lecturer:

Wu Wenfeng, Professor, Director of the Finance MBA Program, and Associate Dean at Antai College of Economics and Management, Shanghai Jiao Tong University. From 1992 to 2001, he studied and obtained bachelor's, master's and doctorate degrees in the Department of Computer Science and Management of Shanghai Jiaotong University. He has been working in school at the end of 2001 and has served successively as lecturer, associate professor, professor, PhD supervisor, director of finance MBA program, director of finance master program, and director of finance department. His main research field is Finance, and the research direction is Financial Engineering, Securities Market and Corporate Finance. Since 2008, he has published nearly 20 SSCI English papers in internationally renowned journals, including Journal of Law & Economics, Journal of Banking & Finance, Journal of Corporate Finance, etc. He has published dozens of Chinese papers in "Economic Research", "Management World", "Economic Quarterly", etc. He has won the Outstanding Achievement Award of Humanities and Social Sciences Research in Chinese Universities and the Outstanding Research Achievement Award of Shanghai Philosophy and Social Sciences.

About the Lecture:

Literally meaning “mutual protection”, Xiang Hu Bao (XHB) is a novel online platform operated by Alibaba's Ant Financial to facilitate mutual risk sharing of critical illness exposures among participants. There are three major distinctions between XHB and traditional insurance products. First, XHB leverages the tech giant's platform and digital technology to lower enrollment and claim processing costs. Second, different from insurance products applying sophisticated actuarial pricing models, XHB collects no premiums ex ante from its members instead equally allocates indemnities and administrative costs among participants ex post after each claims period. Third, XHB restricts coverage amount, which is less than typical critical illness insurance products, particularly for older participants. We show that the third feature of XHB can lead to separating equilibrium, a la Rothschild-Stiglitz, where low-risk individuals enroll in XHB while high-risk individuals purchase critical illness insurance. Proprietary data from XHB shows that the incidence rate of the covered illness among XHB members is indeed far below that of comparable critical illness insurance across different age groups. Our findings further suggest the role of advantageous selection in explaining the cost advantages of the Fintech-based mutual protection programs.