How Gathercare Makes Money (vs How Insurance Make Money) - GatherCare

How Gathercare Makes Money (vs How Insurance Make Money)

RM0-RM50 monthly for RM1 million annual medical protection? There must be a catch in there somewhere. And the longstanding words of wisdom, if it’s too good to be true, it probably is? In our case, we proudly roll up this saying and throw it away. Yes, ask any of our existing Sharers, they’ll swear by how affordable this program is you’d think we bribed them. No, we absolutely did not.

But ok, as a Sendirian Berhad (Private Limited) company, how do we even survive when during most months Sharers make less than RM50 payment? In this article, we leave no tables unturned. Read on to find out.

Same Goal Different Approach

Gathercare aims to put the ball in the basket just like any health insurance companies. The difference is where others are competing to rank in a basketball league, we just have our own ball and our own basket to put it in. We don’t have coaches, we don’t wear same coloured sleeveless tops with matching strips, and we don’t have to bounce and dribble the ball towards the basket.

Gathercare is NOT an insurance, we are an independent Crowd Sharing platform. Thus, we play by different rules compared to insurance companies even when we both bent on helping the public to reduce the suffering of paying an arm and a leg for necessary medical treatments.

How Insurance Works, How do They Make Money?

Insurance works on the principle of Pooling of funds and thereby Sharing the risks. Let’s use an example:

Let us assume there is a total of 1000 citizens in a country, and every one of them are of the same age and lead the same lifestyle. They are minions of some sort. And there’s just one medical centre serving the whole minionites community and the cost per treatment is RM10,000, regardless of severity of each medical case. (purely hypothetical, just bear with me for now)

Approximate medical cases occur in a year is 10 out of 1000 minions. The total medical cost a year derived to be 10 x RM10,000 = RM100,000.

In a year, every minion contributes RM100 hence RM100 x 1000 minions works out to be RM100,000 which is an exact amount to cover the total medical cost for the year with absolutely no profit or loss. Hence the 1,000 minions pool RM100 for insurance to mitigate a common risk, that is medical treatment cost.

Up to this point, Gathercare is very similar to insurance except when we delve into the money making part, that’s where the road diverges in a yellow wood.

This RM100 contribution in insurance term is the Premium that you pay for a certain health insurance policy. The amount of the Premium or the policy price is calculated to be as close as possible to 1:1 ratio with the total claims paid plus operational cost. Higher than that, it is considered overpriced, and vice versa. Very little profit, if any is made though underwriting (Premium) alone, instead the Premiums collected are being chanelled to fund an investment pool. Return from these investments is where the big money is.

By increasing their Premium income, companies enlarge their investment pool thus increasing their return on investment. But get this, the unclaimed money in the premium pool also translates into profit for the insurer. The more claims withheld the more profit for the company. This raises the question about the intention of the insurance companies withholding a claim. As you can see, it creates a conflict of interest between the insurance company and the wellbeing of the insurant.

Unlike Insurance, Gathercare DOES NOT profit from the Sharing Deposit

We learned about Premiums in insurance. In Gathercare, the “Premium” is the Sharing Deposit that Sharers put in at RM100 upon signing up. This pool of Sharing Deposit is bagged and put away in a Trustee managed account. It can only be touched when there’s a hospital bill needs to be paid off when any one of the Sharers is admitted.

Gathercare health insurance takaful
The Sharing Deposit concept
Sharing Deposit covers RM10000 medical bills

Initially, 1000 Sharers put in their Sharing Deposit, the collected amount will be 1000 x RM100 = RM100,000 available for crowd sharing purpose. It will remain at that if there’s no medical bill to be paid because it’s not linked to any investment, nor used for other expenditures.

For example, for a particular year, let’s assume the compounded medical bills of a few unlucky Sharers who fell ill that year has shifted RM60,000 from the Sharing Deposit. RM60,000 divided by 1000 Sharers is RM60. This means that RM60 will be deducted from each sharer’s RM100 Sharing Deposit, leaving behind RM40 unused.

When Crowd sharing amount exceeds RM50 limit

The Sharing deposit model creates a fair and transparent system where it is not in the company’s best interest to withhold any claim when the profit is not tied to the number of cases that got through the Crowd Sharing process.

How Does Gathercare Manage Sharing Deposit?

In the big book of Gathercare Crowd Sharing 11 commandments, at any time when Sharers’ deposit balance falls below RM50, it is incumbent upon them to top the balance up back to RM100.

Sharing Deposits are kept safe and at any given time, any Gathercare Sharer can log in to our mobile app to review how much Sharing Deposit balance there is, how much have been crowd shared for each month, down to the last decimal point, who involved, which hospital, so on and so forth.

In the rare event if the medical cost for a month is way higher than the accumulated crowd sharing deposit, wouldn’t we go bankrupt then? No, we’ve prepared for that. Gathercare program has been re-insured by local and international insurance companies to provide temporary loss coverage to protect the community’s deposit. Yes, insurance companies are our friends.

With this level of transparency, there’s very little reason to remain skeptical. We are even certified as a Syariah Compliant Crowd Sharing program.

gathercare is Syariah compliant

So, How Does Gathercare Make Money?

By crunching the numbers from the above example, we can now understand how each sharer only had to share RM60 for the whole year or averaging a mere RM5 “premium” a month.

Alas, as a company we need to pay bills, salaries and we need to move around. We also need to pay for the continuous development of our mobile app, our partner’s services, namely e-Mas who manages patients’ hospital admission processes and audits medical cases. And then there’s marketing and advertising, equipment, rental, office upkeep, stationeries, dart board, cookies and snacks, toilet papers…ok, let’s not labour the point anymore. Suffice to say, all those require money.

To join the community as a Sharer, a person is required to pay RM360 annually as membership fee. This fee goes to separate account which the company has access to. This fee is enough to cover all our expenses and the balance is what becomes as profit.

For example (we can never run out of examples, can we?), let’s say in a year we managed to reel in 10,000 Sharers each brings RM360 to our coffers. Our total earning from annual fees alone will amount to RM3,600,000 per year! That’s just 0.3% of Malaysian population and considering half a million babies are born each year, the future seems bright indeed. 

Apparently, sustainability is not an issue for us even doing without any investment using the Sharing Deposit. In short, we only need commitment from Sharers for their RM360 annual fee and RM100 Sharing Deposit for Crowd Sharing purpose. That’s RM460 to enter, plus RM2.50 for online transfer charges.

For a total of RM462.50 entry fee and very low monthly sharing commitment, you’ll get an RM1,000,000 medical protection. What more can one asks for?

Actual monthly Crowd Share for the whole of 2021

We shall KISS (Keep It Small and Simple)

Of course, 10,000 Sharers per year is a bit of a long shot from current ~5000 Sharer count. But like any millionaire backstory you read, the first million is always the hardest. Once you get past that, the second and third million will find its way into your bank account through a much shorter route.

With that said, we always keep our operational cost at the minimum. Our product is digital, so no raw materials and fabrications needed. Automated database cuts cost down for human resource, online marketing is much cheaper than tv and radio advertisement, etc… Practical and efficient is the name of the game.

What Does the Future Hold for Medical Cost Crowd Sharing?

Gathercare seeks to gather support from every Malaysian because health protection is a right, not a privilege. Lowering the cost of good medical treatment is beneficial for all and only with the backing from the masses would turn this vision into a reality.

How low can we go? As low as FREE. Yes, you read that right. (it’s in all caps, duh). Our mission is free medical protection for all once we have nurtured and grown a large enough community. When we reach that critical mass, it will open a whole new realm of possibilities. You are already enjoying platforms such as Facebook, Instagram and Twitter for free all this while. There’s no reason we can’t do the same, in good faith, for a healthier Malaysia.

Insurance or Crowd Sharing?

Why not both? Well, it really is totally up to you. You can choose whether you want to brace the traffic to go out for an RM40 piece of steak for lunch, plus 10% service charge, and 6% of whatever tax it is now, or you can order a hearty RM12.90 lunch set through Foodpanda (plus RM0.10 rider’s tip) and you get to keep the parking space you fought so hard for this morning. In the end, you get your tummy filled. One is not better than the other depending on the way you look at it.

Share this

Leave a Comment

Your email address will not be published.