CHINA Law and Practice Contributed by: Fubin Xiang, Xinyi Zhang, Mengmeng Wei and Lanmengyuan Zhang, W&H Law Firm
Regulatory Pressure Is Reshaping Dispute Positions Nowadays, regulatory scrutiny has also tightened. The consumer protection supervisory assessment regime has imposed real costs for mis‑selling, unreasonable declinature and delayed payment, which has also placed insurers under greater pressure in coverage disputes. Insureds are correspondingly more inclined to attack the effectiveness of a clause than to argue its meaning, and to complain to the regulators, which often takes proactive steps to protect consumer rights. 4.2 Policy Wordings and Interpretation Developments Interpretation of Ambiguity Generally, courts interpret policy wording under the Civil Code principles applicable to all contracts, con- sidering the ordinary meaning of the words used, the relevant clauses, the purpose of the contract, transac- tion practices and the principle of good faith. If any ambiguity remains after such interpretation process and two or more meanings are reasonably available, Article 30 of the Insurance Law requests that the court or tribunal adopt the interpretation favourable to the insured or beneficiary, provided that such ambiguity stems from standard clauses. This is similar to the concept of the contra proferentem rule in common law. Interpretation of Exclusion Clauses According to Article 17 of the Insurance Law and a reply from the Supreme People’s Court, the insurer must draw the policyholder’s attention to the stand- ard-form exclusion clause in words, fonts, symbols or other obvious signs, and must clearly explain its content when the contract is made. Failure to meet such obligation would render the clause ineffective. In addition, such requirements do not extend to exclu- sion clauses that were specially negotiated rather than being in standard form. Interpretation of Endorsements Endorsements and other specially negotiated clauses are generally treated as part of the contract. Where there are inconsistencies between endorsements and standard clauses, endorsements shall prevail.
are therefore also often resolved through direct nego- tiations or, in complex cases, international mediation institutions. Confidentiality of Arbitration Arbitration hearings are generally non-public, and leading institutional rules normally impose confidenti- ality obligations on the institution, tribunal and partici- pants. This makes arbitration attractive for sensitive coverage or reinsurance disputes. Finality of Arbitration Awards are final, and there is no appeal on the merits. A party may seek set-aside or resist enforcement only on limited statutory grounds, and the revised Arbitra- tion Law has reduced the ordinary set-aside period to three months. Parties should therefore carefully address tribunal selection, evidence, expert issues and the precise scope of the arbitration clause at the beginning. 4. Coverage Disputes 4.1 Evolving Trends in Coverage Disputes New Risks That Lead to New Disputes Recent disputes have witnessed the emergence of new products and new risks. Cyber incidents, data breaches, AI operations, new-energy products and geopolitical sanctions are producing losses that were not always contemplated when policy wording was drafted. Coverage Disputes Regarding Electronic Distribution As more policies are now taken out electronically, disputes frequently arise over whether the insurer has fulfilled its obligation to provide clear notice and explanation of exclusion clauses through pop-ups, tick‑boxes or forced‑scroll mechanisms. To provide clear and traceable factual grounds for such disputes, China has further elaborated the “dual recording” requirement for both the online and onsite distribu- tion of certain insurance products. This requires insur- ers to make an audio and visual record of the sales process, covering identity verification, an explanation of the product, disclosure of risk and the customer’s consent.
68 I NSURANCE L I T IGATI O N 2026
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