Insurance claim settlement in china by daxue consulting

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October 2021
HONG KONG | BEIJING | SHANGHAI
www.daxueconsulting.com
Insurance claim settlement in China
dx@daxueconsulting.com +86 (21) 5386 0380

© 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES
ALL RIGHTS RESERVED
2
Overview of insurance claim
settlement in China
1.
Risk factors for unsuccessful claim
settlements
2.
03
07
11
How to avoid insurance claim settlement
issues in China
3.
CONTENT OUTLINE

3
ALL RIGHTS RESERVED
Overview of insurance claim
settlement in China
1

4
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The claim settlement speed depends on the type of insurance
Chinese insurance companies boast high claim settlements rates and quick resolutions. However, if it’s true for most insurance B2C
policies, more complex insurance contracts often require longer time periods to settle and are more prone to claim failure.
97 %
2.4
days
40
days
Is the average claim settlement
rate announced by Chinese
insurance companies in 2019.
However, this includes mostly
medical and car insurance,
which have simple contracts
and relatively low indemnities.
More complex contracts are
more prone to claim failure.
Is the average time it took to
settle an insurance claim in
2019 by Chinese insurance
companies. Once again, this
kind of timeframe is more
representative of personal
insurance contracts, companies
should expect longer settlement
time for corporate property
insurance.
Is the maximum time to settle a
claim given to insurance
companies under Chinese law.
Companies have up to 30 days
after a claim is made to make
verifications and then 10 additional
days to make the payment. Note
that some insurance contracts
have clauses that can extend that
first 30 days period.
Source: Hualv, Beijing Fuhua Innovation and Technology. designed by Daxue consulting

5
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Quality of service and public expectations have greatly increased
Although China’s insurance industry is relatively young compared to other developed countries, both quality of service and
policyholder’s expectations have risen to international standards. Today, insurance companies are compelled to offer quick and
comprehensive claim settlement processes.
Source: PICC, Jingdong Allianz property insurance. designed by Daxue consulting
In this excerpt from a home insurance contract, these two
clauses specify that the claim settlement process can
exceed a 30 days period (required by law) in exceptional
circumstances. However, the contract guarantees that no-
matter what, the insurance company will pay indemnities
within up to 60 days after the claim is made.
Insurance companies often advertise quality-of-life claim
settlement features such as 24/7 claim services, AI
assisted claim tools, 1-day guaranteed claim settlement,
on-site assistance, ect.

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Legislations have evolved to better regulate the industry
Although China doesn’t have a very developed insurance culture and the market is still relatively young, legislation and oversight
from the China Banking and Insurance Regulatory Commission (CBIRC) have led to more comprehensive rules regarding
insurance claims.
1980
The Chinese insurance industry starts to develop as business insurance is
slowly introduced and complex insurance contracts start to appear.
1995
The National People’s Congress votes the insurance law of the PRC, providing
guidance and regulations to the industry, it was then amended in 2002 and
2009.
2012
The State Council issued the first law regulating agricultural insurance in China.
Other business insurance niches will get their own texts through the 2010’s
2021
Punitive damages can be claimed with product liability insurance.
Policyholders can now make claims after 3 years for health insurance.
Source: People’s Republic of China Insurance Law, designed by Daxue consulting

7
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Business insurance claims usually requires more paperwork
o Claim settlement for personal insurance in China is usually streamlined to be as easy and speedy as possible, claim
speed being a major sale argument for insurance companies.
o Business insurance contracts tend be more complex with large sum insured and premiums, leading to longer and more
difficult claim settlement processes.
Corporate property insurance
Corporate property covers multiple assets of a
business in often tailor-made contracts. The
complex nature of these contracts and the
important sums involved sometimes call for third-
parties to assess the value of each assets which
can lead to delays in the claim process.
Car insurance
Chinese insurance companies often provide ready-
to-use claim forms for car insurance, making
claims fast and easy.
Product liability insurance
Although product liability contracts are rather
straight forward, there can be uncertainties on who
bears responsibility between suppliers and
retailers or whether a product is actually faulty or
not. Because of the ensuing legal disputes, the
claim process for these contracts can take
significantly longer.
Personal insurance Business Insurance
Health and life insurance
The medical insurance claim process in China is
streamlined by hospitals and insurance companies.
Claims are usually settled in a matter of a couple
of days.
Property insurance
Property insurance requires the most measures for
claim settlements as damage assessment can
take longer and require third-party expertise.

8
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2 Risk factors for unsuccessful
claim settlements

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The most common issues stem from understanding insurance contracts
Insurance contracts clearly lay down the required documents and conditions for claim settlements. Disputes about settlements
originate most of time from a failure to understand the insurance claim requirements.
All documents must be submitted
The contract must cover the claim
The claim must be truthful
Insurance contracts specify all the documents needed to file a claim in case of incidents. In some case it can be a
simple form but for more complex insurance contracts such as property insurance contracts, the number of
documents can be extensive. Failure to provide all necessary documents can lead to claim failure.
Although the general rule for insurance claims stipulate that they can be made 3 to 5 years after an incident, almost
all insurance contracts have clauses restricting the time policyholders have to make their claim. One common source
of claim failure is that claims are not filed in time, allowing the insurer to reject them.
A common source of claim failure comes from contracts not covering the insured in some cases. Contracts have
exclusion clauses that void insurers of liability in certain conditions. If these clauses are met, the insurer is allowed to
reject the claim. For example, flood damages in low-lying areas are not covered in most property insurance contracts.
Whether it is made in bad faith or out of gross negligence, if the content of the claim does not reflect reality, the
insurer is in his right to not only reject the claim but also to seek reparations in front of a court of law.
Insurance claims are time sensitive
Source: People’s Republic of China Insurance Law, Mingya Insurance Brokers, designed by Daxue consulting

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policyholders are accountable to supply all required documents
10
Source: People’s Republic of China Insurance Law, designed by Daxue consulting
policyholders are responsible for providing the necessary documents for claim settlements. If it is a fairly streamlined process for
some insurance policies, it can require time and resources for complex insurance policies.
The policyholder must, to the
best of their ability, provide the
insurer with evidence and other
materials that are relevant to
ascertaining the nature, cause
and extent of the loss (Article 22,
PRC Insurance Law).
Where the insured fails to notify
the insurer of an increased risk
to the insured subject during the
term of the contract, the insurer
will bear no obligation for
indemnification where the
occurring incident covered by
insurance is caused by the
increased risk (Article 52, PRC
Insurance Law).
When an insured event occurs,
the policyholder must notify the
insurer in a timely manner. If the
extent of risk attending the
subject insured increases during
the term of the contract, the
insured must, in accordance
with the contract, notify the
insurer in a timely manner.
The insured must take all
necessary measures to prevent
or mitigate loss or damage
(Article 57, PRC Insurance Law).
Policyholders must provide
all evidence and materials
Policyholders must notify of
increase in risks
Policyholders must notify the
insurer in time

11
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Case study: Personal insurance contract claim settlement flowchart
Common personal insurance contracts like car and health insurance have extensively streamlined claim settlement processes.
Contact the insurer
to report the
incident and take
pictures
Contact the police
to get a certificate
of responsibility.
Bring the car and
certificate to a
repair shop where
damages and cost
will be assessed. Once you signed
the compensation
agreement, the
store will do the
repairs and contact
the insurer for
payment.
1
2
3
4
Notify the insurer of
the incident/disease
File the medical
diagnostic, note
that the hospital
must be recognized
by the insurer.
File the additional
documents like the
accident certificate
and the transfer
certificate in case
of accident and
treatment transfer.
Wait for payment,
claims are usually
filed withing one to
two working days
1
2
3
4
Car insurance Health insurance

12
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Case study: Corporate insurance contract claim settlement flowchart
Corporate insurance contracts tend to insure larger sums and more complex assets. Valuation for such assets and determining
liabilities is much more complex, which leads to a longer claim settlement process and sometimes disputes.
Allow the insurer to
assess the damages and
replacement costs.
If your assessment
does not match the
insurer’s, consider
third-party valuation.
Submit all remaining
required documents.
Receive payment.
Determine if the
damages are covered
by the insurance
contract.
Notify the insurer of
the incident as soon
as possible.
Preserve the damaged
property and gather
evidence.
If the contract has no
replacement clause,
assess the extent of
the damages.
Corporate property insurance
1 2 3 4 7 8
5 6

13
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3 How to avoid insurance claim
settlement issues in China

14
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Avoiding claim failure for personal insurance
Personal insurance claims in China have a very high settlement rate mostly thanks to a comprehensive and fast claim system.
However, policyholders must make sure to submit their claim correctly to avoid delays and, in some cases, claim failure.
Make the claim in time
Most insurance contracts have time sensitive clauses
It is recommended together evidences and notify your insurance
company as soon as possible after an incident occurs.
Know what documents you need to make a claim
All insurance contracts specify which documents are needed
when you make an insurance claim.
Knowing which documents to provide will allow you to avoid
bad surprises in case of emergency and make the claim
settlement process faster.
Make sure your health insurer covers your hospital
Some hospitals are not covered by all insurance companies.
Going to a hospital that is not covered will increase the risk of
claim failure for medical insurance.

15
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Avoiding claim failure for corporate insurance
Business insurance claims issues revolve around insurer liability and accurate asset valuation. Keeping up to date valuation of your
business’ assets will help insurance claims go more smoothy.
Study carefully your contract’s exclusion clauses
Commercial property contracts in particular have a lot of
exclusion clauses depending on the type of asset damaged and
the circumstances of the incident.
Finding the right insurance contract for your business is crucial.
Ask for help from your insurance broker
Your insurance broker can assist you in your claim settlement
journey by analyzing your insurance contract and
recommending you the best course of action to resolve a claim
successfully and in a timely manner.
Assess accurately your business’ assets
It is vital to have your assets regularly assessed so that you do
not overpay premiums but more importantly to have an
accurate value when you will submit an insurance claim.
For complex assets such as factories and storage facilities,
contacting an asset appraisal firm is recommended.

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What Asian Risks Management Services can do for you
16
Analyzing and assessing risks
Designing terms and conditions
Approaching insurers
Analyzing terms and conditions
received
Advising you for the best cover
Following-up in case of claim
ARMS can
help you
to…
Significant experience in…
Mechanical industry
Automotive industry Food industry
Chemical industry

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Insurance broker in China
• Entrepreneurship is associated with risks, let’s turn risks into gains
18
Asian Risks Management Services Limited (ARMS) advises
corporates on insurable risks in China, individuals on medical
insurance and home insurance.
With a presence in Beijing and Shanghai, we provide services
all over China.
INDEPENDENT from any insurance providers, ARMS combines
international and local expertise in the insurance industry
with more than 15 years of presence in the Chinese insurance
market, we act to the BEST INTERESTS of our clients.
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人寿保险
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员工福利
General Insurance
综合保险
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医疗保险

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Have access now to our risk mitigation solutions in China
• Asian Risks Management Services offers tailor-made and innovative insurance solutions for corporates and individuals
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www.asian-risks.com
info@asian-risks.com
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Who we are
Your Market Research Company in China
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We are daxue consulting:
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Kong
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Insurance claim settlement in china by daxue consulting

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