Mutual Aid Background

For centuries, people have voluntarily pooled their resources together for the mutual benefit of the community. This approach is time-tested and has been proven successful globally. Over time, these early practices became more formalized and served as the basis of the modern insurance industry.

The current centralized structure of the insurance industry, however, has led to widespread dissatisfaction and underrepresentation. Specifically, one of the most common criticisms of the insurance industry is the inherent conflict of interest when processing claims, as premiums not used to pay claims maximize profits. There has also been a significant lack of transparency in understanding all the layers of costs as well as how claims are processed. For example, the commission structure paid to agents creates an excessive cost burden to consumers, especially since the common practice is to front-end load such payments. Additionally, consumers do not typically have any involvement in the claim process. Consumers also have no practical opportunity to influence the decision-making and governance of most insurance companies.

There has been an increase in the number of Web2 mutual aid platforms recently, with the largest companies located in China. In fact, the total number of members across these platforms alone reached over 330 million in 4Q2021 [2]. Due to changing regulations in China, and the tightening of restrictions on new technology companies, most of these mutual aid platforms have been required to close, creating a large market opportunity.

As of the date of this White Paper, while there are a few decentralized finance (“DeFi”) providers offering primarily DeFi-related cover – such as smart contract failure and transaction completion risk -- there does not appear to be an option such as QolaQ offering a Web3 alternative for mutual aid focused on such areas as simple critical illness, health, and life.

[2] Platform Mutual Aid for Healthcare Coverage in China, Rong Yi, Millman, January, 2022