Claim settlement is often considered as a major pain point by policyholders and a challenge by insurance companies to provide the best customer service as possible. As China’s insurance industry is still relatively young compared to other developed economies, great progress has been made in recent years regarding quality of services. Recent regulations and policies and an increasingly competitive insurance market have contributed to insurance claim settlement services in China getting better and better to match international standards. That being said, there are things policyholders need to know about insurance claim settlements in China in order to ensure a faster and worry-free payment after a loss.

How are insurance claims settled in China?

Speed and process for an insurance claim settlement in China depends on the kind of insurance policy and the conditions and characteristics of the asset or person insured. On average, 97% of insurance claims in China are resolved in 2.4 days. Typically, car insurance and personal health insurance claims will be processed within 24 hours while property insurance and most business insurance policies will take several weeks depending on the type of policy and the asset insured. Under Chinese law, insurance companies have a 40-day period to make a payment after a claim is made if all elements of the claim are in order. However, most insurance contracts have specific clauses that extend that period further. Insurance policies like corporate property insurance or product liability insurance usually take longer to settle due to their complexity which also makes them more prone to claim failure due to the large number of elements policyholders must provide.

What are the risks tied to insurance claim settlements in China?

There are several reasons that can lead to an insurance claim failure to settle, which can be summarized into 4 categories:

• Time: According to Chinese law, claims can be made up to 2 years after the loss as occurred, however this is almost never the case in practice because insurance companies usually add clauses that require the claim to be made in a timely manner to make sure there will be no aggravation of damages. One source of claim failure can be attributed to policyholders not making the claim on time.
• Required documents: Insurers will not be able to offer a claim settlement in the case that they are not provided all the elements required to assess the loss correctly. For medical insurance and car insurance, this process is heavily streamlined which makes it easy, but for property insurance policies covering large assets, this can take a lot of time and efforts to gather all documents.
• Coverage: Sometimes, the loss experienced by the policyholder falls under an exclusion clause from the insurance contract, voiding the obligation of the insurer to settle the claim. Although this can sometimes be fixed with an extension clause, it is important to know the full extent of your insurance coverage.
• Fraud: If the claim is fraudulent, the insurer has no obligation to settle it. Sometimes, policyholders can make a fraudulent claim by mistake, unknowingly omitting key elements. We recommend consulting your insurer or your insurance broker if you have any doubt about how to report a loss.

Easy steps to make you insurance claim settlement process easier in China

Most of the time, the responsibility of an insurance claim failure lays on the policyholder’s shoulders. To make everything in your power to minimize the risk of insurance claim failure, we recommend that you make sure that:

• Know the exclusion clauses of your insurance policy: Knowing the extent of your coverage will allow you to make appropriate claims.
• The claim is made in time: The majority of insurance claim failures in China come from a delay in reporting the loss to the insurance company.
• Provide all the required elements: although the process is fairly streamlined for personal insurance policies, business insurance contracts have multiple layers of claim documents and sometimes require the services of a third-party appraiser.

To learn more about insurance claim settlements in China, please download our detailed report on the matter

Contact Asian-Risks to learn more about product liability insurance in China.

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