CHINA Trends and Developments Contributed by: Hao Zhan, Jia Wan, Xuelei Wang and Wei Cui, AnJie Broad Law Firm
Insurance litigation cases regarding new types of insurance policies continue to emerge as well. In addi- tion to disputes arising out of traditional insurance pol- icies, such as motor vehicle liability insurance, work injury insurance, pension insurance and life insurance, cases related to cyber-insurance, D&O liability insur- ance and green agriculture insurance are also emerg- ing. Insurance litigation regarding these new types of insurance policies may involve multiple legal relation- ships and complicated facts, which creates difficulties and challenges for law practitioners and adjudicators. Some new types of insurance litigation are set out in detail below. Increase in securities class actions leading to rapid growth in claims and litigation cases relating to D&O liability insurance policies With the official implementation of the new Securi- ties Law of the People’s Republic of China in March 2020, PRC supervisory departments have continued to make breakthroughs in clarifying the scope of liabil- ity and compensation for responsible directors and officers, and have further strengthened the recourse against the actual controller of listed companies. A prominent example is the enforcement action against Evergrande Real Estate Group. In May 2024, the China Securities Regulatory Commission (CSRC) found that Evergrande Real Estate had engaged in fraudulent bond issuance and information disclosure violations, imposing a fine of CNY4.175 billion on the company and a fine of CNY47 million, together with a lifetime securities market ban, on its then chairperson and actual controller, Hui Ka Yan. In August 2026, the Shenzhen Intermediate People’s Court further con- victed Evergrande Real Estate, Evergrande Group and Hui Ka Yan of offences including fraudulent issuance of securities and illegal disclosure of material informa- tion. The case illustrates the increasingly significant regulatory and personal liability exposure faced by companies, directors, officers and actual controllers in connection with securities violations. In 2025, a total of 643 A-share listed companies dis- closed plans to purchase D&O liability insurance, representing a year-on-year increase of 19%. Among them, 256 companies disclosed such plans for the first time. By the end of 2025, a cumulative total of
1,753 A-share listed companies had disclosed D&O insurance purchase plans, bringing the market pen- etration rate to 32%, up four percentage points from the previous year and marking the ninth consecutive year of growth. In addition, the new Company Law of the People’s Republic of China came into effect as of 1 July 2024, further strengthening the duties and liabili- ties of directors, supervisors and senior executives, significantly increasing their motivation to purchase D&O insurance. Under the influence of the stricter regulation, the risk of litigation involving listed companies related to mis- representation and fraudulent statements has risen, the standards of directors and officers performing their fiduciary duties have been higher and corresponding disputes over D&O liability insurance policies have increased. Compared with other liability insurance litigation, D&O liability insurance litigation has fewer referable precedents, complex legal relationships and difficulties in the application of laws. Situations will be more complex when foreign litigation procedures are involved. As many Chinese companies choose to be listed in stock markets outside of main- land China, such as the Hong Kong Stock Exchange, the New York Stock Exchange or the NASDAQ, the class actions and investigations brought against insureds in those jurisdictions will make claims under D&O liability insurance policies even more challenging in matters pertaining to: • whether penalties imposed by foreign regulators are covered under the D&O policy; • how to apply foreign law to allocate loss when cov- ered and uncovered insureds are both sued; and • how to determine the reasonableness of the settle - ment amount entered in the proceedings in another jurisdiction when the D&O policy dispute is heard by a PRC court or arbitration tribunal, etc. Insurance litigation in the Internet Plus era With the rapid development of the social economy and internet services, online sales of insurance products are expanding rapidly, creating new opportunities for the development of the insurance industry. Accord- ing to the Interim Measures for the Supervision of the Cyber Insurance Business issued by the former China
79 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook