CHINA Law and Practice Contributed by: Fubin Xiang, Xinyi Zhang, Mengmeng Wei and Lanmengyuan Zhang, W&H Law Firm
W&H Law Firm 26th Floor, Building S1 BFC Bund Financial Center No 600 Zhongshan East Second Road Shanghai China
Tel: +86 21 2225 7666 Fax: +86 21 2225 7667
Email: xiangfubin@weihenglaw.com Web: sh.weihenglaw.com/Contact
1. Key Drivers and Resolution of Insurance Disputes
that disputed standard terms shall first be interpreted according to their ordinary meaning and, where two or more interpretations remain reasonably available, in favour of the insured or beneficiary. The policy terms most often tested include definitions of the insured event, causation language, exclusions, notification and co-operation duties, sanctions claus- es and aggregation wording. Conflicts between the main policy, schedules, endorsements and negotiated Dispute resolution strategies depend on the policy’s dispute resolution clause and the commercial inter- ests of the parties. Formal proceedings are not usu- ally the first step. Mediation and negotiated settlement can occur before proceedings or during litigation or arbitration, and Chinese courts and arbitral institutions actively encourage settlement. Policyholders in retail lines also frequently file regulatory complaints instead of or before suing. Early settlement can significantly reduce expert, preservation and legal costs, but insurers must also consider consistency across a series of claims under the same insurance products and the risk of setting a bad claims-handling precedent. Litigation provides a structured court process and a right of appeal on the merits, but hearings and judgments are less private. Arbitration offers specialist arbitrators, procedural flexibility and confidentiality, but institutional and tri- special clauses also give rise to disputes. 1.3 Dispute Resolution Strategy and Outcomes
1.1 Common Triggers of Insurance Disputes The most common insurance disputes in China arise from disagreements over the interpretation and scope of policy wording, especially concerning exclusion clauses and whether clear notice and explanation have been provided. Subrogation is also one of the most frequent causes of action in cargo insurance and property insurance. Disputes over causation, particu- larly regarding whether an insured risk is the proximate cause of a loss, are common in property and liability claims with multiple contributing factors. These issues are not evenly distributed across the market. In terms of volume, motor and property insur- ance continue to account for the largest number of litigation cases, while product liability insurance and marine and cargo insurance lead to a disproportion- ately high number of complex, high-value disputes. In recent years, there has been an increase in disputes related to newer product types and incident types. Cyber and data breaches, new energy products, AI products, war and international sanctions are generat- ing new fact patterns, and established issues of word- ing, causation, exclusions and claims handling need to be applied to these novel risks. 1.2 Role of Policy Wording and Drafting Policy wording is one of the principal contributors to insurance litigation in China. While a significant portion of the market uses standard terms drafted by insurers, Article 30 of the Insurance Law requires
65 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook