Insurance & Reinsurance 2026 Comparisons

Statutes

The main legal sources include the Insurance Law of the People’s Republic of China (PRC) and the PRC Civil Code, as well as other relevant laws such as the PRC Maritime Law (which contains a dedicated chapter on marine insurance), the PRC Civil Procedure Law, the PRC Arbitration Law and the PRC Special Maritime Procedure Law, which regulate litigation and arbitration involving insurance and reinsurance disputes.

Judicial Interpretations

The Supreme People’s Court (SPC) issues binding judicial interpretations on the application of laws, including (without limitation) the four interpretations of the Insurance Law and the interpretations relating to the Civil Code.

Administrative Regulations and Regulatory Rules

The State Council and central government departments issue regulations concerning insurance and reinsurance, and insurers’ operations are largely governed by rules published by the National Financial Regulatory Administration (NFRA).

International Agreements

China is not party to a treaty devoted solely to insurance, though insurance-related commitments appear in broader agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Mainland-Hong Kong/Macao Closer Economic Partnership Agreement (CEPA), which address cross-border supply of insurance services and elements of regulatory co-operation.

In China, court judgments are not formal sources of law. However, in the absence of explicit rules, courts are required to consult guiding cases issued by the SPC and refer to other prior judicial decisions for reference in similar matters. However, none of these constitutes binding precedent in the common-law sense.

Insurance and reinsurance activities are supervised by the NFRA and its local bureaus.

Regulatory Authority and Policymaking

The NFRA exercises unified supervision over the insurance sector and formulates regulatory rules and policies for insurers.

Licensing, Ownership and Governance Supervision

The NFRA oversees market entry, business-scope and branch approvals, and shareholder and equity-change approvals. It supervises insurers’ corporate governance, risk management, internal-control and disclosure arrangements.

Prudential, Risk-Based and Conduct Supervision

The NFRA supervises capital adequacy, solvency, reserves, risk management, sales conduct, suitability, disclosure and consumer-protection matters through a combination of off-site monitoring, on-site inspections, penetrating supervision and technology-enabled data reporting.

Enforcement, Recovery and Risk-Control Mechanisms

The NFRA conducts insurance-sector enforcement and investigations, and handles illegal insurance activities. It develops recovery and resolution mechanisms for insurers, and co-ordinates with local authorities to prevent and contain insurance-related financial risks.

Under PRC law, only institutions approved by the NFRA and holding the relevant insurance business licence may conduct insurance or reinsurance business. PRC law does not distinguish between licensing requirements based on the type of policyholder; once an insurer is licensed for a particular business line, it may write policies across consumer, SME and corporate segments.

To establish an insurance company, the applicant must meet the requirements under the Insurance Law, the Measures for the Administration of Shareholding in Insurance Companies, and related NFRA rules:

• a minimum paid-up capital of CNY200 million is required for insurers and reinsurers writing only life or non-life business (CNY300 million for composite reinsurers);
• satisfaction of financial, credit, governance and shareholder-qualification criteria by the shareholder(s) (or, where the shareholder is a foreign insurance company, the conditions under the PRC Regulations on the Administration of Foreign-Funded Insurance Companies) is required; and
• meeting other requirements, such as qualified personnel and approved articles of association.

Insurers are subject to ongoing prudential supervision. Under the Insurance Law and the Solvency Administration Rules, failure to meet any of the following may result in the NFRA imposing supervisory measures, including suspending new business:

• core solvency ratio below 50%;
• comprehensive solvency ratio below 100%; or
• comprehensive risk rating below Category B.

Excess layer insurance is essentially direct insurance. There are no separate licensing or underwriting rules; the general product and conduct requirements apply. Reinsurance is also governed by the Insurance Law, with more detailed requirements set out in specific regulations such as the Reinsurance Business Administration Rules.

The overall tax burden on insurers typically arises from:

• VAT on insurance services;
• VAT-related local surtaxes;
• stamp duty on certain non-life insurance contracts; and
• corporate income tax at the insurer level.

VAT is generally levied at 6% on premium income for general VAT taxpayers – though agriculture and livestock insurance, life insurance with a maturity of more than one year, insurance services provided for export goods, etc, are exempt from VAT.

VAT payable may also give rise to surtaxes such as Urban Maintenance and Construction Tax (typically 7%, 5% or 1% depending on location) and Education Surcharge (3%) plus Local Education Surcharge (2%), calculated on the VAT tax payable.

Stamp duty is imposed on property insurance contracts (excluding reinsurance) at 0.1% of the premium amount.

Insurers are also subject to corporate income tax at a rate of 25% on taxable profits. Certain contributions to the Insurance Security Fund and specified technical reserves may be deducted on a pre-tax basis.

Unlicensed foreign insurers are not permitted to conduct insurance business in China. Foreign reinsurers may accept cessions from Chinese cedents, provided that they meet specified financial strength and credit-rating requirements and complete registration under the China Reinsurance Registration System. Transactions with licensed Chinese counterparties (including related-party transactions) are not prohibited, but Chinese entities must comply with the applicable disclosure and reporting obligations.

Since 2021, China has removed equity-ownership caps for foreign investment in the insurance sector. Foreign investors may establish wholly foreign-owned insurers, joint-venture insurers or branches in China. Where the largest (or sole) foreign shareholder is an insurance company, it must satisfy the requirements under the Regulations on the Administration of Foreign-Funded Insurance Companies, including total assets of at least USD5 billion.

Other foreign financial institutions investing in insurers in China are generally subject to the shareholder-qualification standards applicable to domestic investors under the Measures for the Administration of Shareholding in Insurance Companies.

To obtain an insurance licence, foreign investors must submit the application materials required under the Regulations on the Administration of Foreign-Funded Insurance Companies. The NFRA will decide whether to accept the application within six months of receiving a complete set of documents. The applicant must complete the preparatory establishment within one year from receiving the preparatory approval (with a possible three-month extension) and thereafter submit the formal opening application. The NFRA will decide whether to approve the establishment within 60 days of receiving a complete formal application. Upon approval, the entity may obtain its business licence and commence operations.

China does not maintain an EU-style passporting or mutual-recognition regime that would allow an overseas licence to be used to write business onshore. Onshore insurance activities must be conducted through locally licensed entities.

The authors are not aware of any insurance-licensing changes introduced in China specifically in response to Brexit.

Reinsurance is permitted in China. Cedent retention is primarily governed by maximum retention caps.

For property insurers, retained premiums for the current year may not exceed four times paid-in capital and surplus reserve, and liability per risk unit may not exceed 10% of paid-in capital plus surplus reserve, with any excess reinsured. Mergers of insurance companies are much less common in China.

For credit insurance, total retained liability may not exceed ten times net assets; for financing-related credit insurance, the cap is four times net assets, or six times where at least 30% of the insured loans relate to inclusive finance for small and micro enterprises.

At the regulatory level, concentration limits also restrict “full cession” in proportional reinsurance. Except for certain specialised lines (such as aerospace, nuclear, petroleum and credit), a direct insurer may not cede more than 80% of each property-risk unit to the same reinsurer.

Insurers must also:

• integrate reinsurance into their overall risk and capital management;
• maintain a reinsurance strategy addressing retention and cession; and
• for overseas cessions, conduct ongoing monitoring and semi-annual assessments of related credit and liquidity risks.

M&A activities involving insurance companies in China mainly take the form of:

• acquiring existing shares from other shareholders; or
• subscribing for newly issued shares through capital increase.

In practice, both routes are often combined to address capital needs and adjust control.

Under the Measures for the Administration of Shareholding in Insurance Companies, shareholders of insurance companies are classified into four categories:

• Financial Class I shareholders – holding less than 5%;
• Financial Class II shareholders – holding 5% or more but less than 15%;
• strategic shareholders – holding 15% or more but less than one third; and
• controlling shareholders – holding one third or more, or whose voting rights are sufficient to exercise control over shareholder resolutions.

Insurance M&A transactions are subject to NFRA supervision:

• acquiring 5% or more of an insurer triggers NFRA approval, while Financial Class I shareholders (holding less than 5%) do not require prior approval but must complete a regulatory filing (filing is not required for shareholders of listed insurers);
• natural persons may only become Financial Class I shareholders by purchasing shares of listed insurers;
• domestic enterprises, partnerships, public institutions and social organisations may invest (public institutions and social organisations may only act as Financial Class I shareholders);
• foreign shareholders must be financial institutions, assessed in accordance with the foreign-invested insurance company rules; and
• investors are also subject to lock-up requirements that vary by shareholder category, except where transfers occur as part of regulatory risk resolution, by regulatory order, or between entities under the same controller.

In addition to NFRA supervision, acquisitions of insurance companies may also fall within the merger control regime. Transactions that meet the statutory thresholds must be notified to the Administration for Market Regulation for review.

Insurance products are distributed through institutional channels and insurance salespersons with certain licences or qualifications required by the NFRA. The distribution channels include direct sales by insurers and indirect sales by insurance intermediaries.

Insurance sales intermediaries are categorised as insurance agents and insurance brokers. Insurance agents act on behalf of the insurers within the scope authorised by the insurers, including full-time agencies, part-time agencies and individual insurance agents. The most prominent example of part-time agencies is the bank insurance model (BIM), or bancassurance, where banks sell insurance products through their branches. In contrast, insurance brokers act on behalf of the policyholders, providing risk assessment, negotiating terms and assisting with claims.

All distribution activities are strictly regulated by the NFRA. Insurers must obtain the insurance business operation licence issued by the NFRA to conduct insurance business. Insurance agencies or brokers must obtain the insurance agency or broker licence, respectively, in order to distribute insurance products.

Insurance salespersons refers to individuals who execute insurance sales, including individual practitioners and employed personnel of insurers, or insurance intermediaries who engage directly in insurance practice. Insurance salespersons must complete a practice registration within one insurer or insurance intermediary to perform insurance activities.

As for reinsurance products, a cedent may directly enter into a contract with a reinsurer or select the reinsurer through an insurance broker for reinsurance business.

Under PRC law, pre-contractual disclosure is governed primarily by Article 16 of the Insurance Law, which establishes an enquiry-based disclosure system. The insurance applicant is required to truthfully disclose those risk-related facts that the insurer asks about. There is no general duty to volunteer all material information, and courts strictly restrict insurers from relying on non-disclosure where they failed to raise clear, specific questions. Correspondingly, the insurer bears a professional obligation to conduct adequate inquiries, design precise questionnaires, and investigate risks consistent with its underwriting expertise. The insurer must also give clear and prominent explanations of exclusion or limitation clauses, failing which such clauses may not be enforceable.

By contrast, PRC law makes a clear doctrinal distinction between non-marine and marine insurance. Non-marine insurance is governed solely by the Insurance Law and strictly follows the enquiry-based model: consequences for non-disclosure arise only for matters that the insurer has expressly asked about. Marine insurance, regulated also by the Maritime Law, imposes a broader duty of good-faith disclosure, requiring the disclosure of all known material circumstances, even in the absence of the insurer’s enquiry. Failure to disclose such material information may entitle the insurer to rescind the contract if the non-disclosure would have affected underwriting decisions.

Failure to comply with pre-contractual information obligations may trigger two principal rights for the non-breaching party: the right to rescind the insurance contract and the right to deny liability for insurance benefits. These consequences arise under Article 16 of the Insurance Law, which adopts an enquiry-based disclosure system (see 6.1 Obligations of the Insured and Insurer).

Right to Rescind the Insurance Contract

Under Article 16, if a policyholder, intentionally or due to gross negligence, fails to perform the obligation of truthful disclosure, and such failure is sufficient to influence the insurer’s decision on whether to underwrite the insurance or to increase the premium rate, the insurer shall have the right to rescind the contract.

Right to Deny Liability for Insurance Benefits

Legal consequences associated with this right depend on the subjective state of policyholders. In cases of either intentional non-disclosure or gross negligence that significantly affected the insured event, the insurer is not liable for compensation or payment of insurance money for events occurring prior to the termination of the contract. With regard to the treatment of premiums, however, the insurer is required to refund the premiums if the non-disclosure was due to gross negligence, whereas it is not obligated to do so if the concealment is intentional.

Notwithstanding the foregoing, the insurer shall not rescind the contract if it knew of the policyholder’s failure to perform the obligation of truthful disclosure at the time of entering into the contract; in such a case, the insurer shall be liable for compensation or payment of insurance money.

An insurance agent acts for the insurer, and its conduct is legally attributable to the insurer under the Measures for the Supervision of Insurance Agents. Agents are required to:

• accurately collect and transmit risk information;
• provide truthful explanations of policy terms; and
• give prominent warnings about exclusions and liability limitations.

Agents must also prevent misleading sales practices, conduct proper identity verification and protect customer data. Because they represent the insurer, any misrepresentation, improper advice or failure to provide mandatory explanations by the agent is treated as the insurer’s own violation, and the insurer bears the resulting legal consequences during contract formation.

An insurance broker, by contrast, acts for the insured, as defined in the Measures for the Supervision of Insurance Brokers. Brokers must:

• perform independent and objective needs assessments;
• recommend products based on the insured’s interests; and
• ensure that the insured receives clear, complete and accurate information about policy terms and market alternatives.

They are also required to disclose conflicts of interest, maintain professional independence, conduct suitability evaluations and protect client information. Unlike agents, brokers do not bind the insurer; instead, they owe duties of loyalty and professional diligence to the insured. If a broker provides negligent advice or fails to communicate material information, it may be liable to the insured for breach of its statutory obligations, though the insurer generally does not bear responsibility for the broker’s conduct.

Article 13 of the Insurance Law mandates that, upon reaching an insurance contract, the insurer must issue an insurance policy or other insurance certificate to formalise the contract. Validity is strictly tied to insurable interest, defined as a legally recognised interest in the subject matter (Article 12). Crucially, for personal insurance, the applicant must possess this interest at the time of contract conclusion – whereas for property insurance, the insured must possess the interest at the time the insurance accident occurs (Article 48).

According to Article 18 of the Insurance Law, a valid insurance contract must, at a minimum, explicitly contain the following terms:

• parties – names and domiciles of the insurer, policyholder, insured and beneficiary (in personal insurance);
• subject matter – the specific object or life/body being insured;
• coverage and exclusions – the scope of insurance liability and explicitly stated liability exemptions;
• duration – the insurance period and the commencement time of liability;
• value – the insured value (for property) and the insured amount;
• cost – the premium amount and payment method;
• settlement – the method for paying indemnity or insurance benefits; and
• legal recourse – liability for breach of contract and methods for dispute resolution.

Notably, for liability exemption clauses to be effective, the insurer must explicitly explain these to the applicant under Article 17; otherwise, those specific terms will not be binding.

Under PRC law, unnamed parties may become beneficiaries of an insurance contract if the contract designates them or identifies them by category. This is grounded in Article 12 of the Insurance Law (insurable interest requirement), which permits insurance for the benefit of a third party with insurable interest. For property insurance, Article 55 recognises any lawful economic interest – such as that held by tenants, subcontractors or mortgagors – as a valid insurable interest, enabling them to be beneficiaries if the policy so provides.

Identification rules therefore require that the policy expressly name the beneficiary or define an identifiable class, though the beneficiary need not be individually specified. If the policy does not mention the third party or its category, the courts generally do not extend coverage, as the contract must reflect the parties’ true intent under the Contract Chapter of the Civil Code.

Regarding disclosure obligations at formation, the existence of third-party beneficiaries does not alter the statutory allocation of duties. Under Article 16 of the Insurance Law, the insurance applicant must truthfully answer the insurer’s enquiries; beneficiaries have no independent disclosure obligation, even if they are unnamed or later identified. Any non-disclosure is assessed solely by reference to the insurance applicant’s conduct. Thus, third-party beneficiaries do not modify or expand the disclosure regime at the contract formation stage.

Under PRC law, the core insurance contract rules discussed previously do not change for consumer insurance contracts, though they operate differently in the reinsurance context due to separate regulatory provisions.

For consumer insurance, the Insurance Law applies uniformly. There is no statutory rule creating different formation requirements, different insurable-interest rules or a different disclosure framework. The enquiry-based disclosure system established by Article 16 applies in the same way to consumers and to commercial insureds. Courts sometimes apply stricter scrutiny to insurers’ conduct, especially regarding the duty to explain liability-limiting clauses (Insurance Law, Article 17) and clarity of enquiries, based on the PRC Consumer Rights Protection Law and SPC interpretative principles. However, all mandatory terms under Article 18 of the Insurance Law, written-form requirements under Article 11, and beneficiary rules under Articles 23 and 55 equally apply.

However, several rules differ for reinsurance. Reinsurance is still subject to the Insurance Law, but the Measures for the Administration of Reinsurance Business impose expanded disclosure obligations on the ceding insurer. Unlike primary insurance where disclosure is limited to insurer enquiries under Article 16, reinsurance requires the cedent to provide complete, accurate and timely risk information, including material changes during negotiations, regardless of whether the reinsurer has asked. This constitutes a broader duty of transparency, reflecting the professional nature of reinsurance.

Captive insurance and catastrophe bonds are the primary forms of alternative risk transfer (ART) in China. Chinese insurance companies have actively engaged in issuing catastrophe bonds in overseas markets.

Under the Notice on the Supervision and Administration of Captive Insurance Companies, captive insurance companies are regulated as a special form of insurance company established solely to provide property, short-term health and accident coverage for their parent group and employees.

Regarding insurance-linked securities (ILS), such as catastrophe bonds, in September 2025 the NFRA issued the Notice on the Issuance of Insurance-Linked Securities by Domestic Insurance Companies in the Hong Kong Market (the “Notice on ILS Issuance in HK”). This new regulation explicitly supports domestic insurers in sponsoring “sidecar” ILS in Hong Kong and broadens the scope of recognised ILS beyond standalone catastrophe bonds, allowing insurers to cede risks to special purpose insurers (SPIs) via proportional reinsurance, thereby accessing global capital markets for risk diversification.

There are no known cases in this jurisdiction where overseas ART transactions are explicitly treated or recognised as reinsurance contracts by the NFRA. However, under the newly issued Notice on ILS Issuance in HK, when a domestic insurer issues “sidecar” ILS in Hong Kong, the arrangement is treated as a reinsurance transaction.

Insurance contracts in China are interpreted following the general principles of the Civil Code, yet they are subject to strict special rules. Under Article 142 of the Civil Code, the interpretation of a declaration of will to a specific addressee shall rely on the terms used, interpreted in accordance with the purpose of the contract, trading habits and the principle of good faith.

However, specific rules apply to standard clauses. Under Article 30 of the Insurance Law, if there is a dispute over a standard clause provided by the insurer, it shall be interpreted according to “common understanding”. If there are two or more reasonable interpretations, courts or arbitration tribunals shall adopt the interpretation that favours the insured or the beneficiary. It is worth noting that in recent judicial practice involving sophisticated commercial entities (such as large-scale reinsurance) courts are increasingly cautious and often view both parties as having equal bargaining power.

Extraneous evidence is generally permitted and plays a vital role in ascertaining the true intent of the parties. Evidence regarding the negotiation history, the placement slip and the “usual practice” of the specific industry is frequently admitted. For instance, in complex engineering or marine insurance disputes, courts may reference international industry customs or the Basic Terminology of Insurance standards to interpret ambiguous technical terms.

The concept of “warranty” creates a distinct dichotomy between marine and non-marine insurance under PRC law.

In non-marine insurance, the Insurance Law does not explicitly use the term “warranty”. Clauses labelled as warranties are typically treated as contractual obligations regarding the safety of the subject matter. Pursuant to Article 51 of the Insurance Law, if the insured fails to perform an obligation to maintain the safety of the insurance subject matter, the insurer has the right to increase the premium or rescind the contract.

In marine insurance, pursuant to Article 235 of the Maritime Law, warranties must be strictly complied with. Express warranties must be written in the policy or contained in documents referenced therein.

The consequences of breach differ significantly. In non-marine insurance, the insurer can usually only refuse liability if the breach of the obligation significantly increased the risk and was the proximate cause of the insured event. In marine insurance, however, a breach of warranty generally discharges the insurer from liability for any loss occurring after the breach, regardless of whether the breach caused the loss, unless the parties have agreed otherwise or the breach has been remedied prior to the loss.

PRC statutory law does not provide a specific definition for “conditions precedent” in the context of insurance liability. However, parties are free to agree on such clauses based on the principle of party autonomy. To be effective, conditions precedent must be expressly described in the contract, and, due to their nature of exempting or suspending the insurer’s liability, the insurer usually bears the obligation to draw the policyholder’s attention to these clauses pursuant to Article 17 of the Insurance Law.

Common conditions precedent in the Chinese market include “payment of premium” clauses (where the policy states that liability only attaches after premium payment) or specific dispute resolution preconditions in trade credit insurance.

The consequence of a breach of a condition precedent is that the insurer’s obligation to indemnify does not arise or is suspended until the condition is fulfilled. Unlike a breach of warranty, which may lead to termination of the contract, a failure to satisfy a condition precedent typically means that the claim is not yet payable, though the contract itself often remains in force. If the condition becomes impossible to fulfil due to the insured’s fault, the insurer may be permanently relieved of liability for that specific claim.

Disputes over coverage are typically resolved by first analysing the policy terms. Clear provisions are enforced as written, while ambiguous terms may be interpreted with reference to extrinsic evidence such as negotiation history and industry practices, as well as applicable laws. Consumer insurance contracts are subject to consumer protection laws, which include the contra proferentem rule (resolving ambiguities in favour of the consumer) and impose heightened pre-contractual disclosure obligations on insurers.

Reinsurance dispute arbitration and litigation are not very common. Insurers and reinsurers in China generally prefer to negotiate to resolve their disputes, without resorting to litigation or arbitration.

The Insurance Law requires that the right to claim insurance payment must be exercised within two years (for non-life insurance) or five years (for life insurance), after the date when an insured or a beneficiary knew or should have known of the occurrence of the loss.

Typically, an unnamed beneficiary or other third party cannot enforce an insurance contract. However, under Article 65 of the Insurance Law, in liability insurance disputes where the insured’s liability to a third party has been determined, the insurer must compensate the third party directly upon the insured’s request. If the insured fails to make such a request, the third party retains the right to claim direct compensation from the insurer for the portion due to the insurer.

Insurance disputes must comply with the exclusive, hierarchical and territorial jurisdiction provisions of the Civil Procedure Law. Exclusive jurisdiction vests with the court at the location of real estate or a port with authority over disputes concerning that property or port operations. Hierarchical jurisdiction operates through a four-tiered court system, including primary, intermediate, high and SPC, where first-instance jurisdiction is generally allocated based on the dispute’s significance and amount in controversy. Territorial jurisdiction generally places insurance contract disputes under the jurisdiction of the court at the defendant’s domicile or the location of the insurance subject matter.

The Insurance Law and the PRC Law on the Application of Laws to Foreign-Related Civil Relations contain no specific regulations on jurisdiction and choice of law for insurance disputes. Jurisdiction for such disputes shall be determined pursuant to Chapter 2 of the Civil Procedure Law. Regarding the law applicable to foreign-related insurance disputes, Article 41 of the Law on the Application of Laws allows the parties to choose the governing law. If the parties have not made a choice, the law of the habitual residence of the party whose obligation best characterises the contract, or another law most closely connected to the contract, shall apply.

In the PRC court system, the second-instance judgment is the final one. In contrast to common law systems, judges in China often hold broader authority, enabling them not only to question the parties actively but also to investigate facts on their own initiative.

Litigation is generally initiated by the plaintiff’s filing, and encompasses ordinary procedures, summary procedures, special procedures, etc. A party who disagrees with a first-instance judgment or ruling has the right to appeal to the courts at the next higher level. The second-instance court will examine the relevant facts and the application of law based on the grounds of the appeal.

If a party considers that a legally effective judgment or ruling contains an error, they may apply to a higher-level court for a retrial. However, the enforcement of the judgment or ruling continues during the retrial process.

For domestic insurance disputes, legally effective judgments are to be enforced by either the court of first instance or a court situated where the property subject to enforcement is located, provided that the latter is at the same level as the court of first instance, pursuant to Article 235 of the Civil Procedure Law.

When seeking enforcement of a foreign judgment in China, an interested party may directly petition the competent intermediate court. Alternatively, the foreign court may request enforcement from PRC courts under the terms of an international treaty binding upon both states or based on the principle of reciprocity. Following review, if it is determined that enforcement would not violate fundamental principles of PRC law nor impair China’s sovereignty, security or public interests, the court may issue an enforcement order to give effect to the judgment.

Under Article 2 of the Arbitration Law, arbitration clauses contained in commercial insurance and reinsurance contracts are legally enforceable. However, a valid arbitration clause shall incorporate the following essential elements:

• an expression of intent for an application for arbitration;
• a clearly defined subject matter for arbitration; and
• a chosen arbitration commission.

Where an arbitration agreement fails to specify, or unclearly specifies, the arbitrable matters or the arbitration institution, the parties may conclude a supplementary agreement. If no such agreement is reached, the arbitration agreement shall be void.

Under Article 248 of the Civil Procedure Law, a party may apply to enforce a domestic arbitration award when the other party fails to comply, unless the award falls within the special circumstances enumerated therein.

On 2 December 1986, China acceded to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), subject to two reservations: the reciprocity principle and the commercial reservation. PRC courts are accordingly bound to recognise and enforce arbitral awards rendered in other contracting states in compliance with the Convention’s provisions.

For enforcement of foreign arbitral awards, Article 304 of the Civil Procedure Law permits a party to file a direct application to the intermediate court in the place of the domicile of the person against whom the application is made or where the property of that person is located. Where the respondent’s domicile or the subject property is situated outside China, the applicant may alternatively petition the intermediate court at their own domicile or at a venue bearing a proper connection to the dispute. The court shall adjudicate the matter in accordance with international treaties to which China is a party, or based on the principle of reciprocity.

Alternative dispute resolution (ADR), particularly mediation, is integral to settling insurance disputes in China. According to Article 9 of the Civil Procedure Law, courts handling civil cases shall conduct mediation based on the principles of voluntariness and legality. In practice, mediation is commonly organised by judges or specially invited mediators. The position is not different with respect to consumer contracts or reinsurance contracts.

Pursuant to Article 23 of the Insurance Law, upon receiving a claim from the insured or beneficiary, the insurer must assess it promptly or within 30 days for complex cases (unless the contract provides otherwise) and should notify them. For claims within coverage, payment should be made within ten days after an agreement is reached. Where the insurance contract provides for a time limit for compensation or payment, the insurer must fulfil its obligations within such time limit.

If the insurer fails to provide timely compensation, it must not only pay the insurance monies but must also compensate for any losses caused by the delay. Additionally, the insurance regulatory authorities may impose a fine ranging from CNY50,000 to CNY300,000 on the insurer.       

Under Article 60 of the Insurance Law, where an insured event is caused by a third party’s damage to the subject matter of insurance, the insurer shall, from the date it pays compensation to the insured, exercise subrogation rights against the third party within the limits of the amount paid. However, if after the occurrence of the insured event the insured has already obtained compensation from the third party, the insurer may make a corresponding deduction from the insurance money payable to the insured.

In addition, the insurer may not claim against the insured’s family members or the insured’s constituent members, unless such persons intentionally caused the loss.

In 2025, insurtech in China transitioned from a phase of “channel digitalisation” (moving sales online) to “industrial intelligence” (deep integration of AI and IoT into the insurance value chain). The market is defined by the following key developments.

Collaborations

Collaborations have evolved from simple traffic acquisition partnerships to deep technical integration. Insurance companies are increasingly partnering with industrial technology firms to access real-time risk data.

• New energy vehicles – insurers are collaborating with electric vehicle (EV) manufacturers to utilise “telematics” data. Unlike traditional factors, this data allows for dynamic risk assessment based on driving behaviour and battery health, facilitating the development of usage-based insurance models.
• Healthcare integration – in the health sector, collaborations between insurers and third-party health management platforms have created “interactive policies”. Through wearable devices and authorised medical data sharing, insurers offer premium discounts or increased coverage to policyholders who meet health targets, shifting the role of insurance from “payer” to “health manager”.

Products and Technology Applications

Vertical large language models

Following the general AI boom, major Chinese insurers are deploying proprietary “insurance vertical large models” in recent years. These AI systems go beyond simple chatbots; they are capable of analysing complex medical records for underwriting, assisting in legal liability determination and even generating code for internal systems.

Parametric Insurance 2.0

Powered by blockchain and satellite remote sensing, agricultural and catastrophe insurance products have become more sophisticated. “Smart contracts” on the blockchain automatically trigger payouts when satellite data confirms a disaster, eliminating the need for manual on-site claims adjustment and significantly improving liquidity for the insured.

Anti-fraud graphs

The use of “knowledge graph” technology is common in identifying organised insurance fraud. By analysing vast networks of relationships between claimants, repair shops and hospitals, insurers can detect circular fraud rings that are invisible to human investigators.

The NFRA maintains a dual approach of “active encouragement” and “strict boundary setting”. The regulatory philosophy in 2025 emphasised that technology must not bypass financial licensing requirements or infringe on data privacy.

Data Security and Privacy Protection

This is the top regulatory priority. The Regulation on Administration of Network Data Security imposes strict obligations on data processors. The regulator strictly scrutinises the cross-border transfer of insurance data and the authorisation chains in “Big Data” risk control. Insurers are required to ensure that data obtained from third parties is collected with explicit user consent, preventing the “abusive use” of personal information.

Governance of IT Outsourcing and AI

Pursuant to the Measures for the Administration of IT Outsourcing Risks of Banking and Insurance Institutions, the regulator has clarified that insurers cannot transfer their primary management responsibilities to third-party tech vendors. If a system failure or data breach occurs at the vendor level, the licensed insurer is held accountable. Furthermore, the regulator is increasingly focused on “algorithm governance”, requiring insurers to ensure that AI-driven pricing and underwriting algorithms are transparent, explainable and free from algorithmic discrimination against specific consumer groups.

Rectification of the “Expense Gap”

The regulator has launched campaigns to regulate the co-operation between insurers and internet platforms. A key focus is cracking down on the practice of paying excessive “technical service fees” to platforms as a way to disguise illegal commission payments. The regulatory requirement is that fees paid to tech platforms correspond strictly to the value of the technical services provided, ensuring the “separation of fees and commissions” to maintain fair market competition.

The Chinese insurance market is currently navigating a transition period characterised by the convergence of macroeconomic shifts and technological disruptions. The most prominent risks and the corresponding regulatory responses are as follows.

Asset-Liability Matching Risk (Interest Rate Risk)

The prolonged low-interest-rate environment has intensified the risk of “negative spread” for life insurers, where investment returns struggle to cover the rigid guaranteed rates of legacy policies. The NFRA has taken decisive action by lowering the cap on the pricing interest rate for traditional life insurance products, and mandating the “integration of reporting and conduct” to strictly control expense loading and prevent aggressive pricing wars.

New Energy and Technological Risks

The rapid dominance of new energy vehicles and the expansion of energy storage systems have introduced high numbers of claims due to battery thermal runaway and costly integrated repairs. Concurrently, the rise of AI brings algorithmic liability and data privacy risks. The NFRA issued the Implementation Plan for the High-Quality Development of Green Finance in the Banking and Insurance Industries, explicitly encouraging insurers to research differential pricing mechanisms for new energy vehicles and to strengthen risk management standards for emerging technologies.

Extreme Weather and Climate Change Risks

The frequency of floods and typhoons affecting inland Chinese cities has exposed a significant protection gap and challenged historical catastrophe modelling. The NFRA has emphasised the construction of a multi-layered disaster risk protection system. This includes the Opinions of the State Council on Strengthening Regulation, Preventing Risks and Promoting High-Quality Development of the Insurance Industry, which urges the industry to expand coverage breadth and explore market-based risk transfer mechanisms.

To address the emerging risks, the market has developed the following targeted products and solutions.

Asset-Liability Matching Risk (Interest Rate Risk)

In response to the lowering of guaranteed interest rates, insurers are aggressively shifting their product mix from fixed-income traditional life insurance to floating-return products. Dividend-participating insurance and universal life insurance have become the mainstream new products. These allow insurers to share investment risks with policyholders, thereby reducing the pressure of rigid long-term liability. Additionally, commercial pension annuities with long lock-in periods are being promoted to align asset duration with liability duration.

New Energy and Technological Risks

The industry has fully transitioned to the Exclusive Commercial Insurance Clauses for New Energy Vehicles. Unlike traditional auto policies, these extend to the “Three Electrics” (battery, motor, electric control) and specific scenarios such as charging risks. Furthermore, to address energy storage risks, insurers have developed specialised energy storage system safety liability insurance, which often includes IoT-based risk monitoring services as part of the package to prevent thermal runaway incidents.

Extreme Weather and Climate Change Risks

To solve the liquidity issues in traditional claims adjustment during disasters, parametric (index) insurance is rapidly expanding beyond agriculture to cover urban flooding and power grid interruptions. Payouts are triggered immediately when meteorological data hits a threshold. Additionally, utilising the Hong Kong market to issue catastrophe bonds has become a key alternative solution for Chinese insurers to transfer domestic typhoon and earthquake risks to the global capital market.

Opinions of the State Council on Strengthening Regulation, Preventing Risks and Promoting High-Quality Development of the Insurance Industry

Issued by the State Council in late 2024 and serving as the overarching guideline for the NFRA’s enforcement actions in 2025, this document represents the most significant top-level design for the sector in a decade. It fundamentally reshapes the industry by mandating strict market access controls to prevent improper industrial capital influence, enforcing a rigorous classification system for insurance products (separating savings from protection), and establishing a potent mechanism for risk resolution. It explicitly requires the industry to return to its fundamental function of risk protection and serves as the legal basis for the current wave of strict supervision.

Notice on Promoting the Deepening of Reform of the Personal Marketing System in the Personal Insurance Industry

Issued by the NFRA, this regulation was the central focus of market conduct supervision throughout 2025. It targets the long-standing industry issue where the expense assumptions reported in actuarial filings differed significantly from the actual expenses incurred. The Notice requires insurance companies to strictly align their actual execution expenses with the filed actuarial assumptions. The rigorous enforcement of this regulation has profoundly impacted the bancassurance and agency channels, forcing a reduction in commission rates and reshaping the profit models of insurance intermediaries.

Regulation on Administration of Network Data Security

Issued by the State Council, this regulation acts as the external compliance standard for the insurance industry’s digital operations. It imposes stringent obligations on insurers regarding the processing of personal information, data classification and cross-border data transfer. Specifically, for the insurance sector, it clarifies the compliance boundaries for using “Big Data” in underwriting and claims adjustment, requiring insurers to obtain explicit, separate consent from policyholders when sharing data with third-party tech vendors or reinsurers, thereby significantly increasing the compliance cost for insurtech innovations.

Measures for the Regulatory Ratings of Insurance Companies

Issued by the NFRA, this measure establishes a formal supervisory-rating system for insurers covering governance, solvency, asset-liability matching, IT resilience, risk management and consumer protection. Ratings combine quantitative and qualitative indicators and are used for graded supervision, on-site triggers and market-access decisions. Practically, it raises regulatory emphasis on corporate governance, IT and consumer-protection practices.

Measures for the Consolidated Supervision and Administration of Insurance Groups

Issued by the NFRA, this measure tightens consolidated supervision by clarifying consolidation scope, applying “substance over form” for boundaries, and strengthening group governance, intra-group controls and concentration-risk management. It empowers the NFRA to require simplification of complex structures and to curb non-core expansion that increases group risk. The rule increases group-level transparency and resilience.