Chinese Insurance Contracts: Law and Practice

Zhen Jing

Document

Page 1190

Index

abandonment: and indemnity 1015; marine insurance, and 1015–1020
accident insurance 733; see also life insurance
actual total loss: marine insurance 1015–1017
administrative regulation by State Council: Agricultural Insurance Regulation 38–39; Deposit Insurance Regulation 40–41; Regulation on Administration of Foreign-Funded Insurance Companies 39–40; Regulation on Compulsory Motor Vehicle Traffic Accident Liability Insurance 38
agency: general principles 1035–1043; termination of 1042–1043; transfer of 1038
agreement on essential terms of insurance contract 142–146; commencement of liability 144–145; duration of insurance 144–145; exemptions of liability 144; insurance liability 144; insurance premium 146; insured amount 145–146; insured value 145–146; subject matter 143
Agricultural Insurance Regulation 38–39
annuity insurance 732
arbitral awards: enforcement of 1104–1105; enforcement of overseas, in China 1117–1118; setting aside of 1108–1114
arbitration 1100–1120; commissions 1101; for disputes arising from insurance subrogation 1114–1116; for disputes from foreign economic and trade activities 1116; flexible 1108; general rules 1100–1101; independence 1107; non-public hearing system 1107; procedure for insurance disputes 1105–1107; proceedings 1102–1103; professional 1107; technical 1107; tribunal, formation of 1102–1103; voluntary 1108
arbitration agreement 1101–1102; governing law for 1105
Arbitration Law of China 1100–1105
assignment: of policy, exemption clauses 335–336; subrogation, and 616–624
assignment of policy: exemption clauses 335–336; in marine insurance 1022–1026
assignment of subject matter of property insurance 704–724; Chinese law 713–716; civil law jurisdictions 712–713; common law jurisdictions 707–712; duty of notification 716–717; failure in notifying, consequence for 721–723; insurable interest 705–707; material increase of risk 717–721
authority: of the agent 1035–1038; power and 1035–1036; types of 1036
award 1103–1104
arbitral see arbitral awards
Beijing Financial Regulatory Bureau 123
Beijing Insurance Intermediary Association (BIIA) 123
Beijing Municipal Civil Affairs Bureau 123
beneficiary: meaning 734
BIIA see Beijing Insurance Intermediary Association (BIIA)
board insured vehicles, liability for persons on 930–931
burden of proof: insured's duty to provide evidence and information 510–511
business license 1050
business-related work 876–877
“but for” test 463–465
cargo transportation insurance: rescission, and 696–697
causation 444–475; application of doctrine of proximate cause in judicial practice in China 450–466; application of inevitability test in accident insurance 453–456; application of proximate cause in China 446–466; “but for” test, application of 463–465; discretion of court 471; doctrine of proximate cause wrongly used by court 471–472; duty of disclosure, and 284–285; effect of express wording in policy 469–471; exception for application of doctrine of proximate cause 469–472; HPC guidelines 449; independent causes 465–466; inevitability test in chain of events 450–453; one event induces another 457–458; proportional payment 466–469; proximate cause 445–446; recommendation for incorporating doctrine of proximate cause in Chinese law 474–475; SPC Interpretation 447–448; statutory provisions in Insurance Law 446–447; two concurrent proximate causes 459–463
caution: burden of proof for proximate cause 472–474
CBIRC see China Banking and Insurance Regulatory Commission (CBIRC)
certificate of insurance 148–149
channels for use of insurance funds 86–87
China Banking and Insurance Regulatory Commission (CBIRC) 44
China Insurance Regulatory Commission (the CIRC) 19, 44
China's insurance industry: after foundation of PRC 13–14; competition 17–18; economic reform 14–15; formation 10–11; history and development 9–23; modern insurance, emergence 9–10; monopoly of insurance market by PICC, broken up of 17; open-door policy 14–15; pre-1949 11–13; reopening of PICC's insurance business 15–17; top three companies 18
Chinese law: traditional underpinning 28–29
Chinese legal system 28–44; historical overview 29–30
CIRC see China Insurance Regulatory Commission (the CIRC)
circuity of action theory 643
civil liability: criminal prosecutions, and 586–587; guidelines for imposition of 582–583
co-insurance: reinsurance, and 958–961
commencement of liability: issue of policy, and 153; payment of premium, and 153; specified condition precedent for 154; specified place, and 153–154; specified time, and 153
common law: insurer's pre-contractual duty of disclosure at 363–365
compensatory damages for late payment of claims 523–534; damages arising from delay in litigation 531–532; determination of damages 523–526; limitation period for claims for late payment 533–534; loss of interest 529–531; loss of profit due to business interruption 526–529; types of damages available 526–532
compulsory liability insurance 823–824
compulsory motor insurance: advance of rescue costs 910; claims 911–913; contents of contract 909–914; exemptions 910; liability covered 909; obligations of the insured 910–911; persons required to insure 894–895; recovery from the tortfeasor 910; third party rights against insurers 914–918; transfer and rescission of contract 913–914
compulsory motor vehicle insurance: rescission, and 697
compulsory motor vehicle liability insurance 430–431
conditions 165–167; for insurer to comply with 167; precedent to insurer's liability 166–167; precedent to policy or risk 166
conduct-based fraud offence: under Fraud Act 2006 589–591; under German Criminal Code 592–593
consent as condition for life policy: issues on ratification 753–754; when and how made 749–752; withdrawal 754–755
consent for rescission: academics’ views 681–683; approaches in English law 683; court's decisions 681; other persons, by 680–683; rules provided by CIRC and SPC 682–683
consequences for life policies without insurable interest: both parties bear consequences 239–240; insurer pays insurance money as compensation to insured 238; return of premium 237
consideration 154
construction of terms: contra proferentem, doctrine of 175–177; effectiveness test of exclusion clauses 178; fairness requirement 179–180; judicial control 178–180; rules under Insurance Law 173–174; usual understanding in contract law 174–175
constructive total loss: marine insurance 1017–1020
contractual exemption clauses 323–324
contra proferentem, doctrine of 175–177
contribution, in double insurance 433–436; English law 435–436; Insurance Law 433–435; joint liability contributions 438–439; Maritime Code 2025 435; pro rata liability contribution 436–438
cooling-off period 744
credit insurance 700–701
crime, life insurance and: insured's suicide or the death 810; reform of the law 810–811; SPC rules 807–810; statutory provisions 805–807
criminal offence of insurance fraud: amount involved in fraud for grading the punishment 575; attempted offence under Criminal Law 576; consummated offence under Criminal Law 576; elements 572–574; minimum condition for criminal liability 574–575
criminal prosecutions: civil liability, and 586–587
critical illness: exemption clauses 325–327
C-ROSS: documentary framework 82–83; impact 83; technical framework 81–82
current insurance market: foreign-funded insurance companies in market 25; insurance funds utilisation 24; insurance intermediaries’ market 24; personal insurance market 23; property insurance market 23; solvency of insurance companies 24–25; see also insurance market
damage to motor vehicles 925–927
death compensation 871
defraud insurance money: determination of 578–582; meaning 577–578
departmental rules by ISRA 44
Deposit Insurance Regulation 40–41
direct insurance business transaction 137
directors’ and officers’ (D&O) liability insurance 881–887; nature of 883–885; risks covered by 885–886; risks excluded by 886–887
disability compensation 871
disposal of insurance money as life insured's estate 787–797; death of beneficiary before death of insured 793–795; life insured and beneficiary die in same accident 796–797; loss of beneficiary's right 795–796; no designation of beneficiary 788–792
disputable exemption clauses 324–327
distribution of subrogation recoveries: Australian solution 626–627; Chinese position 624–625; English approach 625–626
double insurance 418–443; broad sense 420–421; Chinese laws 419; compulsory motor vehicle liability insurance 430–431; contribution 433–436; elements 422–426; English law 435–436; insured's duty to notify insurers 431–433; insured's right to claim 436–439; joint liability contributions 438–439; liability insurance 428–429; marine insurance, in 1027–1029; Maritime Code 2025 435; medical treatment insurance 427–428; narrow sense 420–421; personal accident insurance 427–428; pro rata liability contribution 436–438; rateable proportion clauses 439–441; remedies for non-notification 432–433; return of premiums 441–442; same insured, meaning 424–426; same interest on subject matter 422–423; same period of time under different policies 424; same risk 423–424; same subject matter 422; scope of application 426–431; time for notification to each insurer 432; total sums insured exceed insurable value of subject matter 426; types 420–421
duties of insurance agents 1043–1049; after-sales service 1049; collect premium 1048–1049; customer's information 1048; explain the content of insurance contract 1043–1044; guide the proposer to fill out proposal form 1047; imputation of knowledge from agent to insurer 1044–1047; proposal forms and insurance policies in a timely manner 1048
duties of insurance brokers: collect premiums from proposers 1058–1059
disclose information of broker itself and of insurance products 1057–1058; provide advice to proposers 1058; provide true information between proposer and insurer 1055–1057
duties of insurance intermediaries 1038
duty of disclosure 247–313; Australian law 252; causation 284–285; circumstance which insurer's agent can observe is taken to be known by insurer 292–293; deemed waiver 290–297; deficiencies of law relating to remedies 287–288; determination of intentional or grossly negligent breach of duty 280–284; English law 251–252; exceptions 264–265; German law 252; inconsistent observation and information 294–296; inquiry disclosure in non-marine insurance 250–251; on insured only 265–268; insured's actual knowledge 261–263; insurer's agent knows means the insurer knows 293; insurer's duty to inform insured 252–254; insurer's knowledge of non-disclosure after contract concluded 294–296; insurer's knowledge of non-disclosure before contract concluded 290–294; making inquiry to insured or insured's guardian 254–255; marine insurance 251; materiality see materiality; medical examination cannot replace 263–264; oral inquiry 255; recommendations for amendment of law 288–289; remedies for breach 277–289; remedies in relation to pre-rescission losses and premium paid 279; rescission, and 277–278, 285–287; restrictions on insurer's defence of non-disclosure 289–311; scope 261–265; statutory law 249–250; time-bars on right of rescission 297–311; time for performance 268–271; time of concluding contract 268–270; time of reinstatement of life policies 271; time of renewal 270–271; voluntary disclosure 251; way of performing 250–261; written inquiry 255
effectiveness of insurance contract 150–151
employers’ liability insurance 864–877; business-related work, determination of 876–877; coverage under 870–872; exclusions from 872–873; labour relationship, determination of 874–876; work-related injury insurance 866–870
employment relationship: insurable interest 229–230
exclusion clauses: effectiveness test 178
exemption clauses: assignment of policies 335–336; circumstances as prohibited by laws and regulations 327–330; consequence for failure to perform duty of clear explanation 342–344; contractual 323–324; critical illness 325–327; determination 321–327; development of duty of clear explanation 320–321; disputable 324–327; exception or mitigation of duty of clear explanation 327–332; group insurance 333–335; insured has effected same kind of policy more than once 330–331; insurer's duty to explain 318–349; insurer's duty to make reference to 336–337; meaning 318–320; onus of proof of clear explanation 344–349; performance of explanation duties for online sales 338–339; performance of explanation duties for telephone sales 339–340; persons to whom insurer should explain 332–336; probation clause in health insurance policy 325; reasonable insured test 340–342; regulatory 321–323; reiterating that certain risks are not covered 331; self-service insurance card 332–333; statutory 321–323; way of making clear explanations 337–338; witness testimony of explanation 347–348; written proof of explanation 344–347
fabricate insurance subject matter: determination of 578–582; meaning 577–578; non-existent 578–580; pre-existing illness in life and health insurance 580–582
facultative reinsurance 944–945
FCA see Financial Conduct Authority (FCA)
Financial Conduct Authority (FCA) 365–367; routes for redress for insurer's breach of 368–370
first-party insurance 4–5
foreign-funded insurance brokers 1067
foreign-funded insurance companies, in market 25
formality of conclusion of insurance contract 146–147
formation of insurance contract 125–163; acceptance by insurer 129–134; acceptance must be unconditional 131; commencement of liability 162–163; communication of acceptance 131–132; consideration 154; counter-offer 134–135; dispute that cover will commence from 0:00 hour 156–158; duration of insurance 162–163; effectiveness 150–151; general principles 126–127; initial contact between insurer or agents and consumers 127–134; insurer's delay in responding to proposer's application 132–134; intermediary, role of 147–148; issuance and delivery of policy 134; late payment of premium 161; legal elements for validity of insurance contract 151–152; offer by proposer 128–130; offer made by insurers 135–136; online formation see online formation of insurance contract;
payment of premium and commencement of insurer's liability 160–161; pre-payment of premium before conclusion of contract 158–160; signature of proposer 155–156; silence constituting acceptance, whether 132; terminologies 126; time when contract concluded 135; time when offer becomes effective 129; trouble spots 155–163; usual steps 127–135; withdrawal of offer 129–130
fraud: meaning 552–554; proof of 555–556
fraudulent claims 548–599; Australian law 564–565; Chinese law 560–561, 565–566, 593–597; collateral ties 566–568; criminal offence of insurance fraud 572–576; criminal prosecution versus civil liability 586–587; English law 561–564, 588–592; exaggeration of extent of loss 560–566, 583–584; fabrication of false cause of loss 558–560; fabrication of occurrence of insured event 556–557; fraud, meaning 552–554; fraudulent devices 566–568; German law 592–593; insured's dishonest state of mind 554–555; intentionally bringing about happening of insured event 557–558; judicial decisions to punishment of insurance fraud 576–586; life insurance 570–571; making of a claim 552; proof of fraud 555–556; recouping payment and expenses incurred for investigation 568–569; remedies 556–557; rescission of contracts 690; statutory framework 549–552; termination of insurance contract 569–570; types 556–570
fraudulent insurance: claims, characteristics of 552–556
good faith: bilateral duty 314; concept in Chinese law 248; insurer's duty of see insurer's duty of good faith; life insurance, and 735–740; reinsurance 963–964; utmost, in marine insurance 981–991
group insurance: exemption clauses 333–335
guiding rules published by High People's Courts 43
health insurance 732–733; see also life insurance
health insurance policy: pre-existing illness in 580–582; probation clause in 325
hearing 1103–1104
hesitation period see cooling-off period
High People's Courts (HPCs): guiding rules published by 43
HPCs see High People's Courts (HPCs)
IAC see Insurance Association of China (IAC)
IAMAC see Insurance Asset Management Association of China (IAMAC)
ICOBS see Insurance Conduct of Business Sourcebook (ICOBS)
implied term theory 643
incontestability clause 297–311; fraud versus fraudulent non-disclosure 305–308; insurance policies, in 299–300; insured event during incontestability period but claim made after 310–311; policy coverage versus 308–309; scope of application 300–301; statutory provisions 298–299; 30-day period 301–303; two-year period 303–304
increase of risk 385–417; Australian law 414–415; Chinese approach 406–410; consequences for breach of duty of notification 406–415; contractual duty of notification 403–404; degree of risk 398; duration of 396–398; English approach 398–401; English law 410–413; German law 415; habitual 405; insured, brought about by 404–405; insured subject matter 393–396; justification for requirement of notification 387–390; knowledge of insured 405; material 390–401; material, test of 391–393; New Zealand law 413–414; performance of duty of notification 401–402; permanent 405; recommendations 415–416; remedies 405–406; statutory duty of notification 403–404
indemnity: abandonment, and 1015; insurance 1097; payment under the policy 880–881
information security rights 121
insurable interest 194–246; economic 201–206; English case law and statutes 196–198; English law 196–200; insurance card transaction 236–237; insurer's duty to check existence of 240–242; Law Commissions’ reform proposals 198–200; legal framework in China 206–207; legally recognised 201–206; marine insurance 998–1005; meaning 1002–1003; nature of 196–200; property insurance see insurable interest in property insurance; test of 201–206
insurable interest in property insurance 207–218; civil liability, derived from 208; common ownership 211–212; consequences for lack of 216–218; co-ownership 211; existing interest 208; expected interest stemming from existent interest 213–214; factual expectation 208; legal relationships with property 212–213; management or operation rights on property 212; meaning 207–209; ownership of property 209–210; persons who have 209–214; when required 214–216
insurance: classifications 3–7; meaning 126; nature of 2–3; regulations 1; topics 1; see also individual entries
insurance adjusters 1090; qualification 1082–1083; regulation framework of 1067–1068; regulatory rule for 1068–1076
insurance adjusting: archives 1082; entrusted procedure 1085; procedures 1077–1080; procedures in violation of relevant laws or regulations 1084–1085; reports 1080–1088; scope of 1083–1084; unilaterally entrusted loss 1087–1088
insurance adjusting practitioners: qualification 1082–1083
insurance agency practitioners 1051
insurance agents 1089; duties of 1043–1049; market access for 1050–1051; operation rules 1051–1053
Insurance Asset Management Association of China (IAMAC) 122–123
insurance asset management companies: administration of 93–95
Insurance Association of China (IAC) 45, 121–122; motor vehicle insurance, rules of 917
insurance brokers 1090; business scope of 1054; duties of 1055–1059; features of 1053–1054; foreign-funded 1067; liability for losses and damages caused to proposers 1059–1061; market access of 1062–1063; operation rules 1064–1067; regulation framework of 1053; regulatory rules for 1061–1067
insurance card transaction: insurable interest in 236–237; regulation of conduct 97–98
Insurance Conduct of Business Sourcebook (ICOBS) 365–367
insurance contract 1; meaning 126; nature of 2–3
insurance coverage: professional liability insurance 879
insurance disputes resolution 1091–1135; arbitration see arbitration; conflict of laws 1096–1097; governing law 1093–1096; jurisdiction 1092–1093; limitation period of actions 1097; linked arbitration-mediation scheme 1118–1120; litigation procedure 1097–1100; mediation see mediation
insurance documents 148–150
insurance funds utilisation 24
insurance industry: further development 25–27
insurance industry mediation 1121–1122
insurance interest, in personal insurance 219–240; child has insurable interest in lives of parents 226–228; close relatives 228; consent as alternative way for creating an insurable interest 230–232; duty to explain amount limit to parent 224–225; employment relationships 229–230; family members 228; legal guardian has no insurable interest on minor child 225–226; life of one's spouse 222; meaning 219–221; natural love and affection 221–228; one's own life 221–222; parents and children 222–223; persons deemed to have 221–232
insurance intermediaries 1033–1090; Basic Rules for Insurance Adjusting on 2 May 2018 (Basic Rules 2018) 1076–1082; duties of 1038; establishment of 1041–1042; general agency principles 1035–1043
insurance adjusters see insurance adjusters; see insurance agents see insurance agents; see insurance brokers see insurance brokers; liabilities of 1039–1040; market 24; prohibited conducts 1040–1041; right of 1038; termination of agency 1042–1043
insurance intermediary associations 123
insurance legislation 33–44
insurance market: current see current insurance market; opening up of 19–21; personal 23; property 23; reform of 19–21; standardised development of 21–23
insurance operations: regulation of 95–96
insurance policy 148
insurance protection fund 109–115; Measures for the Administration of the Insurance Protection Fund 2022 109–115; raising of 112–113; use of 113–115
Insurance Protection Fund Company 111–112
insurance-related enterprises 89–90
Insurance Supervisory and Regulatory Authority (ISRA) 45; departmental rules 44; responsibilities 47–48; take-over of insurance companies by 115–116
insured: actual knowledge 261–263; amount 145–146, 232–234; dishonest state of mind 554–555; duty of disclosure 265–268; guardian, making inquiry to 254–255; insurer pays insurance money as compensation to 238; insurer's duty not to mislead 361–362; insurer's duty to inform 252–254; meaning 126; value 145–146
insured's duties under subrogation 650–663; assist insurer in exercising rights 663; duty to disclose waiver of right 660–663; waiver of right to claim against negligent third party 651–660
insured's duty to notify happening of insured event 497–504; form of notice 499; meaning 126; non-compliance, effect 499–504; performer of duty 498; time limits 498–499
insured's duty to provide evidence and information 504–511; allocation of burden of proof by courts 511; burden of proof 510–511; insurer may require additional evidence 509; non-compliance, consequence of 507–509; proof of loss 510; proof that loss falls within exception 510–511; scope of duty 505–507
insured subject matter: change of environment 394–395; changes of use of 393–394; due to refitting or any other reason, changes of 395–396; geographical area 394; increase of risk 393–396; meaning 126; owner, user, or manager, changes of 396; premium return after occurrence of partial loss to 191
insurer: meaning 126, 733–734
insurer's duty not to mislead insureds 349–362; American law 359–360; determination of misleading conducts 351–353; effective remedies, recommendations for 361–362; insurer's pre-contractual liability 356–358; legal consequences for misleading conduct 353–354; misleading conduct 349–353; pre-contractual liability 354–358; recommendations for effective remedies 361–362; remedies available to grieved insureds 354–358; statutory rules for misleading conduct 350–351
insurer's duty of good faith 362–383; Consumer Duty 2022 367–368; criminal offence for insurer's pre-contractual misrepresentation 370; ICOBS 365–367; implied term rule 371; pre-contractual duties in Australian law 372–376, 381–383; pre-contractual duties in English law 362–371, 381–383; pre-contractual duties in German law 380–383; pre-contractual duties in New Zealand law 376–379, 381–383; pre-contractual duty of disclosure at common law 363–365; regulatory and statutory requirements on insurer's pre-contractual duties 365–371; routes for redress for insurer's breach of FCA rule 368–370
insurer's duty to clearly explain exemption clauses 318–349; see also exemption clauses
insurer's duty to explain content of contracts: consequence of breach 317–318; justification of 315–316; nature of 315–316; way of performing 316–317
insurer's duty to pay valid claims in timely manner 517–523; decision within 30 days 517–519; payment within 10 days after agreement on amount of loss 521; preliminary payment within 60 days of receipt of claim documents 521–523; rejection notice within three days after determination of claim 519–520
insurer's pre-contractual duty of good faith 314–384; explain content of contracts 315–318
insurers’ questions 256–261
insurers’ right to rely on defences under insurance contract 857–859; Chinese position 858; comparative analysis 858–859; recommendations 859
insurer's subrogation rights in co-insurance, restrictions on 636–649; English law 642–648; judicial decision 637–642
Internet insurance 99–109
ISRA see Insurance Supervisory and Regulatory Authority (ISRA)
joint liability contributions 438–439
judicial mediation 1122–1125
judicial system 31–33
labour relationship 874–876
late payment under English law 534–546; insurer's obligation to hold the insured harmless 535–537; judicial decisions on s. 13A of the Insurance Act 2015 542–546; other routes to redress 541–542; reform of current law 537–539; s. 13A of the Insurance Act 2015 539–541
legal compensation rights 120
legal elements for validity of insurance contract 151–152
legal expenses 872
legislative system 30–31
liability insurance 700, 822–888; advocated by statutes 824; compulsory 823–824; conditional rights of third party's direct action against insurer 851–856; directors’ and officers’ see directors’ and officers’ liability insurance; double insurance in 428–429; employers’ see employers’ liability insurance; insurer's direct payment to third party 842–843; insurer's liability for other costs 859–860; insurer's liability to insured 832–834; insurer's obligation for insured's joint and several liability for joint tort 844–845; insurer's right of participation 860–861; insurers’ right to rely on defences under insurance contract 857–859; judicial rules 828–829; limitation period for insured to sue insurer 862–863; limitation period for third party to sue insurer 863–864; “occurrence” or “claim made” 825–827; prior discharge of insured's liability to third party 839–842; product 877–878; professional see professional liability insurance; public 881; reform of Insurance Law on third parties’ rights 856–857; settlement agreements 835–839; statutory rules 827–828; third party liability 829–832; third party's right to claim indemnity payments directly from insurer 846–849; types 823–827; unconditional rights of third party's direct action against insurer 850–851; voluntary 824–825
life insurance 732, 1097; assignment of policies 813–815; Australian law on insurable interest 232; beneficiaries 734, 777–781; change of beneficiary 781–783; consent as condition precedent 749–755; consent for designation of beneficiaries 779–780; consent where proposer rescinds contract 798–799; consequences where no insurable interest 237–240; cooling-off period 744; crime 805–811; designation of beneficiaries where employer insures employees 780–781; designation of beneficiaries where life insured is a person with no or limited capacity for civil conduct 781; designation of beneficiary 778–779; disclosure for reinstatement 772–773; disposal of insurance money as life insured's estate see disposal of insurance money as life insured's estate; duty of disclosure 735–739; duty of explanation of policy terms 739–740; formation of contract 740–744; fraudulent claims 570–571; good faith 735–740; incontestability clauses 738–739; insertion of beneficiary's name into policy 783–787; insurable interest 734–735; insurer 733–734; life insured 734; limit on insured amount 232–234; loss between application and acceptance 742–744; material information 735–737; medical examination 737–738; murder of life insured by beneficiary 801–803; parties 733–734; pre-existing illness in 580–582; prohibition on person without capacity for civil acts 811–812; proposer 734; refund of cash value of policy 797–798; reinstatement see reinstatement of life insurance contract; SPC's rules for reinstatement 767–772; special steps for formation of contract 740–742; subrogation and 817–821; suicide 803–805; suspension 765–767; time when insurable interest must exist 234–236; transfer of beneficiary right 816; waiting period 744–749; whether beneficiary should possess insurable interest in life insured 799–801
life insured: meaning 734
limitation period: for insured to sue insurer 862–863; making of a claim 512–515; subrogation 671–674; for third party to sue insurer 863–864
linked arbitration-mediation scheme 1118–1120
linked litigation-mediation scheme (LLMS): advantages of 1131–1133
improvement of 1134; for insurance disputes resolution 1125–1126; platform of 1126–1127; procedure of 1127–1129; unique features of 1133
loss mitigation 484–495; consequences of failure to comply with duty 486–489; expenses sustained as result of 492–493; necessary and reasonable expense's incurred by insured 489–492; reasonableness of measures 486; statutory and contractual duty 484–486; uninsured loss sustained as result of 494; uninsured personal injury suffered as result of 494–495
loss of work ability expenses 871–872
making of a claim 497–515; fraudulent claims 552; insured's duty to notify happening of insured event 498–504; insured's duty to provide evidence and information 505–511; limitation period 512–515; practical procedures 511–512
marine insurance 6–7, 969–1032, 1097; abandonment 1015–1020 actual total loss 1015–1017; art. 261 of CMC 2025 995–996; assignment and insurable interest 1025; assignment of policy 1022–1026; assignment of vessel 1026; constructive total loss 1017–1020; contract, rescission 695–696; double insurance in 1027–1029; duty to indemnity insured in a timely manner 974–975; duty to pay loss caused by general average 977–979; duty to pay other expenses payable 976–977; duty to pay the insured amount 975–976; exclusion of insurer's liability 979–980; formation of contract 972–974; impact of Insurable Interest Bill 2018 (UK) on insurable interest 1003; indemnity and abandonment 1015; insurable interest 998–1005; insurable interest at time of loss 999–1002; Insurance Act 2015 (UK) 987–990, 996–998; insurer's pre-contractual duty of making an explanation to insured 990–991; limitation period for actions 1010–1015; lost or not lost policy 1004–1005
meaning of insurable interest 1002–1003; nature of 971–972; obligations and liabilities of insurer 974–979; obligations of insured 980; remedies for breach of duty of disclosure 985–987; remedies for breach of warranty 993–995; subrogation in 1005–1010; test of materiality 984–985; utmost good faith 981–991; value of the subject matter 1020–1022; voluntary disclosure in 251; warehouse to warehouse clause 1029–1032; warranty in 991–998; way of performance 981–984
market access, for insurance agents 1050–1051
material facts 275–277; moral hazards 276–277; physical hazards 276
materiality: Australian law 274–275; English law 273–274; increase of risk 390–401; prudent insurer decisive influence test 271–272; prudent insurer mere influence test 272–273
mediation 1120–1134; agreements see mediation agreements; insurance industry 1121–1122; judicial 1122–1125
mediation agreements 1129–1130; judicial confirmation of 1130–1131
medical expenses 871
medical treatment insurance 427–428
misconduct of insurers and employers: prohibition of 97
misrepresentation 305–308; insurer's pre-contractual, criminal offence for 370
modification of contracts 676–698; changing beneficiaries 678; changing insured 678; conditions 676–678; contents which may be modified 678–679; legal effect 679; parties which can be changed 678
moral hazards 276–277
motor vehicle insurance 889–935; advance of rescue costs 910; claims 911–913; compulsory 894–895, 909–914; compulsory motor insurers 892–893; contents of proposal form 908–909; determination of damages 902–904; exemptions 910; Insurance Law 914–915; insured persons, scope of 895–897; insured's pre-contractual duty of disclosure 904–907; insurer's pre-contractual duty to explain content of contract 907–908; legal framework 890–892; liability covered 909; limits of amount covered 897–898; non-compulsory commercial insurance 924–933; obligations of the insured 910–911; premium 900–902; problem and solution in respect of the third parties’ rights 917–918; procedural rights of third parties against insurers 915–917; recovery from the tortfeasor 910; Regulation on Compulsory Motor Vehicle Traffic Accident Liability Insurance 915; roads or other public places 894; Road Traffic Accident Social Relief Fund 918–924; rules of the Insurance Association of China 917; third party rights against insurers 914–918; third party victims, scope of 898–900; transfer and rescission of contract 913–914
motor vehicles, definition 893–894
motor vehicle third-party liability insurance 927–930
National Financial Regulatory Administration (NFRA) 44; local offices (branches) 50; mandates 50–52; organisational structure 48–49
National People's Congress (NPC): statutory regulation 45
NFRA see National Financial Regulatory Administration (NFRA)
non-compulsory commercial insurance 924–933; additional covers 931–933; damage to motor vehicles 925–927; liability for persons on board insured vehicles 930–931; motor vehicle third-party liability insurance 927–930; theft of the vehicle 931
non-marine insurance 6–7
non-proportional reinsurance 947
NPC see National People's Congress (NPC)
observation period see waiting period
“occurrence” or “claim made” liability insurance 825–827
offer made by insurers 135–136
online formation of insurance contract 136–142; contract concluded under insurance card transaction 139–141; determination of proposer in insurance card 142; direct insurance business transaction 137; self-service insurance card transaction 138–139; whether card returnable 141
onus of proof of clear explanation: exemption clauses 344–349; witness testimony 347–348; written proof 344–347
oral inquiry: duty of disclosure 255
overseas arbitral awards: in China, enforcement of 1117–1118
overseas investment with insurance funds: administration 90–93
People's Insurance Company of China (the PICC): insurance business, reopening of 15–17; monopoly of insurance market, broken up of 17
personal accident insurance 427–428
personal insurance 5–6; definition 731–732; insurance interest in see insurance interest, in personal insurance; market 23; premium payment 812–813; types 732–733
physical hazards 276
PICC see People's Insurance Company of China (the PICC)
premium 181–193; cannot be demanded by legal action in life insurance 189; circumstances under which not returnable 192; circumstances under which returnable 190–192; grace of payment 186–187; grossly negligent non-disclosure 191; late or non-payment 165; meaning 181; misrepresentation 191; mode for payment 183–184; modification during insurance period 189–190; motor vehicle insurance 900–902; payment 181–186; payment and reinstatement of life policy 187–188; payment as condition of effectiveness of contract 186; pension insurance 812–813; person to whom paid 183; rate for professional liability insurance 880; return of 190–192; trading habit for payment 184–185; when payable 185–186
privity of contract: reassurance, and 948–950
probation clause: health insurance policy, in 325
probation period see waiting period
product liability insurance 877–878
professional liability insurance: indemnity payment under the policy 880–881; insurance coverage 879; legal basis for 879–880; premium rate for 880
prohibited conducts: insurance intermediaries 1040–1041
property insurance 5–6, 699–730; age of property 703; assignment of subject matter see assignment of subject matter of property insurance; condition of insured property 702–703; credit 700–701; explanation of policy 703; insurable interest 701; insured's duties 724–726; insured's duty to prevent and mitigate insured loss 725–726; insurer's right of subrogation 728; liability 700; location of insured property 702; material facts 701–703; notification of increase of risk 724–725; property loss and damage 700; proposal form 148; right to damaged property 728; risks covered 728–729; risks excluded 728–729; surety bond 701; types 700–701; unvalued policies 726–728; use of insured property 703; valued policies 726–728
property safety rights 120
proportional reinsurance 945–946
proposer: meaning 126, 734
pro rata liability contribution 436–438
protection of insurance consumers: handling of consumers’ complaints 116–117; information security rights 121; insurance protection fund 109–115; legal compensation rights 120; management requirements 117–118; property safety rights 120; regulatory rules 117–121; right to choose 119; right to education 120–121; right to fair trade 119–120; right to know 119; right to respect 120–121; take-over of insurance companies by ISRA 115–116; working mechanisms 117–118
proximate cause see causation
prudent insurer decisive influence test 271–272
prudent insurer mere influence test 7, 272–273
public liability insurance 881
punishment of insurance fraud, judicial decisions to 576–586; defraud insurance money 577–582; exaggeration of extent of loss 583–584; fabricate insurance subject matter 578–582; guidelines for imposition of civil liability or criminal punishment for fraud 582–583; intentionally causing the death, disability, or illness of life insured 585–586; intentionally causing the occurrence of an accident 585; making up false cause of occurrence of insured event 583–584; occurrence of an insured event, inventing 584–585
quota share reinsurance 946
RAFFIC see Regulation on Administration of Foreign-Funded Insurance Companies (RAFFIC)
rateable proportion clauses: double insurance, and 439–441
ratification 1036–1037
reasonable insured test 340–342
regulation of conduct of insurance companies: insurance operations 95–96; misconduct of insurers and employees, prohibition of 97; sales 96
regulation of corporate governance: directors 63–66; evaluation 69–70; senior officers 63–66; structure 66–69; supervisors 63–66
regulation of insurance 45–124; business see regulation of insurance business; corporate governance see regulation of corporate governance; insurance companies see regulation on establishment of insurance companies; insurance group companies see regulation of insurance group companies; see Internet insurance see regulation of Internet insurance; see protection of insurance consumers see protection of insurance consumers; self-regulatory institutions 121–123
regulation of insurance business 59–98; Administration of the Solvency of Insurance Companies 2021 83–84; channels for use of insurance funds 86–87; claims 97–98; clauses and premium rates 71–73; conduct of insurance companies 95–98; C-ROSS 81–83; examination, approval and filing of products 74–75; first generation of solvency regulation system 80–81; information disclosure of new products 79–80; insurance asset management companies, administration of 93–95; insurance fund utilisation, scope of 87–88; insurance products 74–80; insurance-related enterprises 89–90; overseas investment with insurance funds, administration of 90–93; scope 70–80; solvency 80–85; specific insurance products 75–79; use of insurance funds 85–95
regulation of insurance group companies: Measures for the Consolidated Supervision and Administration of Insurance Group Companies 2021 (the Measures 2021) 59–60; Measures for the Consolidated Supervision and Administration of Insurance Groups 2025 (the Measures 2025) 60–63
regulation of insurance intermediaries 98–99
regulation of Internet insurance: business requirements 101–102; definitions 99–101; general requirements 99–101; sales management 102–107; service management 107–109
regulation on establishment of insurance companies 52–59; dissolution of insurance company 58–59; domestic branch 54–56; foreign-funded insurance companies 56–58; overseas branch 53–54; requirements for establishment 52–53
regulatory exemption clauses 321–323
reinstatement of life insurance contract 755–777; automatic reinstatement model 763–764; disclosure 772–773; insurability model 762; Insurance Law 765–767; model of consent by the insurer 765; reform of Insurance Law 773–777; relaxed insurability model 762–763; representation 772–773; SPC Interpretations III 2015 767–772; special features and justification 756–759
reinsurance 7, 936–968; China's market 937–939; co-insurance, and 958–961; contents of contract 951–952; definitions 940; exceptions to doctrine of privity of contract 950–951; facultative 944–945; functions 942–943; good faith 963–964; incorporating of terms from original contract 955–956; insurable interest 961–962; legal framework 939–940; nature of contract 940–942; non-proportional 947; parties 947–948; principles in making 961–965; privity of contract, and 948–950; proportional 945–946; quota share 946; regulations on claim management 966–967; regulations on confidentiality 966; regulations on reinsurance brokers 967–968; regulations on retention of business 965–966; rights and liabilities of parties 956–957; scope of business 957–958; standard clauses 952–955; subrogation 964–965; surplus 946; treaty 944; types 943–947
remedies for breach of the duty: amendment of law, recommendations for 288–289; causation 284–285; deficiencies of law 287–288; intentional or grossly negligent breach of duty, determination of 280–284; pre-rescission losses and premium paid 279; rescission of contract a condition precedent for refusing claims 285–287; right to rescind the contract 277–278
representations 247–313
rescission of contracts 676–698; after insured event has occurred 687; after partial loss of the property 687–689; age of life insured wrongly declared 690; agreement between parties 679; agreement or reinstatement of suspended policy not reached 692–693; beneficiary, by 683–684; cargo transportation insurance 696–697; circumstances under which insurer entitled 689–695; compulsory motor vehicle insurance 697; consent for rescission 697–698; consent of others see consent for rescission; contracts which cannot be rescinded 696–697; cooling-off period, during 686; duty of disclosure, and 277–278, 285–287; fraudulent claims 690; insured failing to perform duty in loss prevention 691–692; insured risk increasing during contract 690–691; life insured, by 683–684; marine insurance contract 695–696; pension policy made for benefit of another person 684–686; proposer, by 679–680; proposer failing to perform duty of good faith 689; return of cash value 686; right specified in policy 693–695; time bars on right 297–311
result-based deception offence, under Theft Act 1968 589
return of premium 190–192; after occurrence of partial loss to insured subject matter 191; double insurance 441–442; misstatement of age of life insured 191; over-insurance 191; pre-paid premium before conclusion of contract 191; rescission of contract during cooling-off period 191–192; rescission of contract in case of increase of risk during insurance period 191–192; risk or insured value of subject matter decreases 192; void life policy without consent of life insured 190; void life policy without insurable interest 190
right(s): to choose 119; to education 120–121; to fair trade 119–120; information security 121; of insurance intermediaries 1038; to know 119; legal compensation 120; property safety 120; to rescind the contract 277–278; of rescission of the contracts, time-bars on insurers’ 297–311; to respect 120–121
risk 384–417; increase of see increase of risk
risk prevention 477–484; consequences of failure to comply with duty 481–484; insurer's right to increase premium or rescind contract 483–484; insurer's right to inspect safety status of subject matter 479–480; insurer's right to take preventative measures 480; repudiation of insurer's liability 481–483; statutory and contractual duty 477–479
roads, definition 894
Road Traffic Accident Social Relief Fund 918–924; administration 921; financial sources 920–921; function 919–920; procedure for advancing funds 921–922; use of 922–924
sales: management 102–107; regulation 96
salespersons: regulation 96–97
self-regulatory institutions 121–123
self-service insurance card transaction 138–139; exemption clauses 332–333
senior management personnel qualification 1050
service management 107–109
settlement agreements: between insured and insurer 838–839; between insured and third party without consent of insurers 837–838; between insurer and third party 838–839; liability insurance 835–839; with Linked Litigation-Mediation Scheme 836–837; with mediation of People's Mediation Committee 835–836
settlement of claims 516–547; compensatory damages for late payment see compensatory damages for late payment; duty to pay valid claims in timely manner 517–523
short-term policy 149
solvency of insurance companies 24–25
State Council, administrative regulation by: Agricultural Insurance Regulation 38–39; Deposit Insurance Regulation 40–41; Regulation on Administration of Foreign-Funded Insurance Companies 39–40; Regulation on Compulsory Motor Vehicle Traffic Accident Liability Insurance 38
statutory exemption clauses 321–323
statutory regulatory authority 46–47
subrogation 600–675; application 602–605; arbitration for disputes arising from 1114–1116; assignment, and 616–624; based on third party's tortious or contractual liabilities 607–609; communal economic interest with the insured 631–632; confusion with assignment in Insurance Law 618–624; contractual duties versus statutory duties 663–664; determination of jurisdiction for action 668–671; distribution of recoveries 624–627; independent economic interest with the insured 632–634; Insurance Law 606; insured cannot make profit 616; insured’ duties under see insured's duties under subrogation; insured's family members 627–629; insured's staff members 629–631; insurer's rights against third party 609–614; insurer's subrogation rights in co-insurance, restrictions on see insurer's subrogation rights in co-insurance, restrictions on; joint trial or change of plaintiff for action 666–667; legal framework in China 605–607; life insurance, and 817–821; limitation period 671–674; marine insurance, in see subrogation, in marine insurance; marine insurance laws 606–607; meaning 600; nature of 600–601; against the non-motor vehicle driver 634–636; origins 601–602; persons immune from action 627–636; against a proposer who is not the insured 614–615; reinsurance 964–965; in reinsurance 667–668; SPC Interpretations IV 2018 607; suggestions for amendment of art 62 Insurance Law 649–650
subrogation, in marine insurance 1005–1010 judicial practice 1009–1010 Maritime Code 2025 1006; SPC Interpretations 2003 1007; SPC Stipulations 2006 1007–1008
Special Maritime Procedure Law 1999 1006–1007
subrogation rights against third party 609–614; amount for insurer to recover 611–612; control of proceedings 614; insured must be indemnified 611; loss caused by negligent third party 610–611; whose name used in proceedings 612–613
suicide: life insurance, and 803–805
surety bond insurance 701
surplus reinsurance 946
suspension of life insurance contract 765–767
take-over of insurance companies: ISRA, by 115–116
temporary policy 149
termination: of agency 1042–1043 of insurance contract, for fraudulent claims 569–570
terms of contracts 164–180; construction see construction of terms; required by law 165; types 164
theft of the vehicle 931
theory of construction of the underlying contract 644–648
third-party insurance 4–5
third-party liability 829–832
third party's right to claim indemnity payments directly from insurer: where insured fails to transmit insurance monies to third party 849; where insured neglects in requesting the insurer to pay the third party 846–848; where third party has not been indemnified or fully indemnified by insured 848
time when contract concluded 135
transfer of agency 1038
treaty reinsurance 944
uberrimae fidei 247
use of insurance funds 85–95
utmost good faith, in marine insurance 981–991; impact of Insurance Act 2015 provisions in CMC 2025 987–990; insurer's pre-contractual duty of making an explanation to insured 990–991; remedies for breach of duty of disclosure 985–987; test of materiality 984–985; way of performance 981–984
voluntary disclosure, in marine insurance 251
voluntary liability insurance 824–825
waiting period 744–749; after effective date of insurance contract 745–747; after reinstatement of suspended insurance policies 747–749
warehouse to warehouse clause 1029–1032
warranties: Chinese law 172–173; English law 167–171; marine insurance, in see warranties, in marine insurance
warranties, in marine insurance 991–998; art. 261 of CMC 2025 995–996; Insurance Act 2015 996–998; nature of 992; remedies for breach of warranty in CMC 2025 993–995
work-related injury insurance 866–870; circumstances 868; determination 867–868; employers’ liability 870; fund 866–867; payment, scope of 869–870; work ability assessment 868–869
written inquiry: duty of disclosure 255

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