CHINA Law and Practice Contributed by: Fubin Xiang, Xinyi Zhang, Mengmeng Wei and Lanmengyuan Zhang, W&H Law Firm
encourage insurers to include environmental and cli- mate factors into risk management, and to develop products supporting green industries and catastro- phe resilience. Underwriters are therefore asking more detailed questions about pollution controls, transition plans, supply chains and governance where those matters are relevant to the insured risk. For insureds, the growing ESG focus has led to greater litigation and regulatory exposure. D&O claims related to ESG disclosure and securities misstatement litiga- tion have increased. Pressure from regulatory enforce- ment is growing. Claims involving vulnerable consum- ers or socially sensitive issues tend to generate public scrutiny. Greenwashing claims are also emerging over incorrect or incomplete ESG disclosures. Overall, ESG factors are moving from the margins to the mainstream of insurance practice, and the trend will accelerate as regulations mature. Insurers need to adapt their underwriting, wording and claims handling accordingly. 8.3 Data Protection Laws The Personal Information Protection Law, Data Secu- rity Law and Cybersecurity Law materially affect insur- ers because underwriting and claims handling require large volumes of identity, financial and often sensi- tive health information. The proposed revision of the Insurance Law, released in September 2026, requires insurers to establish cybersecurity and data security management systems, fulfil cybersecurity protection obligations, regulate data processing activities and effectively respond to cybersecurity incidents. The National Financial Regulatory Administration released the Measures for Data Security Manage- ment of Banking and Insurance Institutions, which add detailed requirements on data governance, classification and grading, security controls and risk assessment for activities such as outsourcing, sharing and transfer. Cybersecurity maturity is consequently becoming an underwriting factor as well as an internal compliance obligation for insurers. The rules also may constrain the use of AI in claims handling, since automated processing of sensitive personal information requires a separate legal basis.
And in litigation, the parties increasingly dispute what the insurer must disclose, with insurers resisting pro- duction on data protection grounds and policyholders potentially arguing that the objection is being used to withhold material evidence. 8.4 Data Centres Data centres combine high insured values with dependence on electricity, cooling, networking and back-up systems. Fire, electrical failure, cooling mal- function, water damage, battery incidents, cyber- attack or utility interruption can cause both physical loss and service outages affecting many customers. The same event can therefore engage property, equip- ment breakdown, business interruption, and cyber and third-party liability covers – and create significant aggregation risk. Relevant claims frequently require close technical analysis of whether physical damage occurred, the actual cause and duration of the outage, the adequacy of alternative capacity and the calculation of lost rev- enue. Where tenants or downstream customers claim service losses, contractual liability caps and indem- nities in data centre agreements can also materially affect the insured’s liability and the insurer’s exposure. 8.5 Social Media Risk In China, social media addiction and its related men- tal health impacts have not yet given rise to a new category of insurance claims. Although the issue has already prompted thousands of plaintiffs to file similar lawsuits in the United States, and has drawn public attention and legal debate in China, such risks are only now beginning to emerge. Furthermore, plain- tiffs seeking to bring algorithmic addiction tort claims under Chinese law will face real difficulty in both establishing the substantive elements of liability and in meeting the procedural burden of proof. 8.6 Next Generation Nuclear Nuclear risk is a specialised and highly technical area of insurance. A rare event can cause massive property damage, business interruption and third-party liability. The China Nuclear Insurance Pool was established in 1999. In 2026, China has 62 nuclear power under operation and more under construction. These pro- vide the domestic pool with the largest pipeline of
75 I NSURANCE L I T IGATI O N 2026
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