Children use an Ofo shared bike at a residential area for migrant workers in a village on the outskirts of Beijing on April 16, 2017. Photo: Reuters/Jason Lee

Bicycle-sharing companies in China are banned from providing services to children under 12 years old, and have been ordered to provide injury insurance to their customers, according to new guidelines issued on Thursday by the Ministry of Transport, the Publicity Department of the Communist Party of China, and eight other administrations.

The new rules follow the death of an 11-year-old boy in Shanghai on March 26, who was hit by a bus while riding a bicycle owned by Ofo, one of the largest bike-sharing startups in the country as well as the fastest-expanding one. The boy’s family has sued the company for 739,718 yuan (about US$110,000) for death compensation and 7 million yuan for mental damage, in the first lawsuit of its kind in China.

Shanghai police had concluded that the child and his guardians should be held chiefly responsible for the tragedy, as traffic law forbids children under the age of 12 from riding bicycles on public roads. As well, the boy was illegally riding against traffic. His parents, however, insisted that the company’s lax management of its bikes, especially the mechanical locks it installed, were to blame for the fatal accident.

Ofo’s early-stage bikes use mechanical locks with fixed passwords. Its major competitor Mobike’s smart locks, in contrast, can only be accessed when users scan QR codes via Mobike accounts. The mechanical locks are relatively easy to crack, even for primary-school students without Ofo accounts.

Ofo had apologized in an online statement after the March accident and promised to work on deterring under-age children from using its bikes. The company has also been gradually equipping its bikes with smart locks based on interconnected technology.

Growing market for ‘ride insurance’

The new government guidelines are likely to stimulate the already fast-growing market for shared-bike insurance, as all the brands offering this service are now required to offer injury coverage to their customers.

Currently, consumers who unlock any of eight brands of shared bikes including Ofo, Youon and Fun Bike via their Alipay account will enjoy injury coverage by Cathay Insurance during every ride. Users can claim a maximum amount of 500,000 yuan for accidental death or disability. Alipay is one of the dominant online payment platforms in China.

Ofo users took 707.64 million rides in June, placing the company in  first place in the bike-sharing market, according to big-data analysis company Yiguan. That works out to an average of 23.59 million insurance policies generated by Ofo riders on a daily basis.