CHINA Law and Practice Contributed by: Fubin Xiang, Xinyi Zhang, Mengmeng Wei and Lanmengyuan Zhang, W&H Law Firm
the insured is a listed company or a consumer-facing brand. Co-ordination of Claimants Securities representative actions, consumer claims brought by consumer associations and public inter- est litigation initiated by the procuratorate have made grouped claims viable, and claimants increasingly combine litigation with regulatory complaints and media pressure. Product liability, group personal accident and platform worker insurance are the most affected insurance product types. Insurers’ Response Insurers are responding by involving themselves ear- lier in disputes. In practice, insurers tend to appoint or approve a counsel at the beginning rather than review- ing costs afterwards. They also tend to participate in setting a defence strategy across related claims so that a concession in one does not compromise the rest, concentrating on the issues that determine the outcome of the entire group. Mediation is also fre- quently used to close cases before the costs of legal fees and expert evidence are incurred. 7. Geopolitical Factors 7.1 Geopolitical Drivers of Insurance Disputes Geopolitical drivers have the most impact on marine, aviation, cargo, trade credit, political risk and reinsur- ance. The Russia-Ukraine conflict, instability affecting major shipping routes, export controls and US-China trade restrictions can affect physical assets, delivery obligations, creditworthiness and the legality or prac- ticality of payments. Instability in key shipping routes, especially in the Mid- dle East has placed additional pressure on marine war risk and cargo lines. As a result, Chinese insureds, les- sors, financiers and insurers are increasingly encoun- tering claims where issues of insured loss, sanctions analysis and contractual performance are closely intertwined. These geopolitical developments are increasing both the volume and the complexity of claims in the affected lines, and are prompting closer scrutiny of
policy wording that was often drafted before the cur- rent geopolitical environment took shape. Coverage disputes concern war and confiscation exclusions, territorial limits, sanctions clauses, causation, aggre- gation, notice and the treatment of losses caused by delay or interrupted supply chains. 7.2 Sanctions and Payment Challenges In 2026, the Supreme People’s Court published a maritime case expressly confirming the mandatory application of China’s Anti-Foreign Sanctions Law and rejecting reliance on foreign unilateral sanctions as a defence to contractual performance. This deci- sion heightens the potential for tension between sanc- tions limitations used in international insurance pro- grammes and mandatory PRC rules. Beyond the substantive issues of coverage and ille- gality, evolving sanctions are creating practical diffi- culties in settling claims. In practice, Chinese banks operate strict sanctions compliance reviews driven by concerns over its liquidity in international transactions. However, under current PRC law, banks are unable to issue a refusal of payment based on foreign sanctions, unless such sanctions are explicitly recognised by China. Consequently, payments sometimes might be delayed or rejected without formal justification, which increases the risk that judgments or settlements will not be performed in time, thereby placing insurers and reinsurers in a difficult position. 7.3 War, Political Risk and Exclusions Recent conflicts, including the war in Ukraine, instabil- ity in the Middle East and major cyber-attacks, have drawn more attention to war, terrorism and political risks. In the PRC market, these perils are excluded from the basic cover and bought back as additional covers. Since the insured assets are typically deployed abroad and the risk is reinsured internationally, Chi - nese insurers and insureds generally adopt wordings consistent with international practices. In terms of aviation war risks, policies usually give the insurer seven days’ notice to cancel the war cover, after which it may be reinstated on revised premium and limits. This offers flexibility in war risk exclusions although timing is of the essence. The Russian air- craft leasing losses are a good example of how such
73 I NSURANCE L I T IGATI O N 2026
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