Pointing out that with easy access to capital, Chinese insurers can afford to offer very low premiums as well as deductibles, he warned that insureds should be cautious about being tempted to assessments and policy terms may differ significantly from the international market.
Cheung noted that over the last three years with the spectacular growth of dry bulk trade in China, he has had to place some business in the Chinese market "because of the difference in the value perception on risks and costs".
This has been exacerbated by scare mongering to some extent by the Chinese players, he added. Some Chinese owners have been told that they may face problems with claims in the international market because of language or other difficulties, whereas if they insure with China companies, they have full recourse throughout the country.
"I have really grave concerns about the different philosophy in things like level of deductibles, the pricing, and also the capacity," Cheung said. The legal interpretation, policy conditions, and claims handling practices are other concerns.
He gave the example of how there is a lack of properly trained average adjustors in China. It is also common practice for surveyors to double up as loss adjustors, who while they are ostensibly working for the client, are actually being paid by the insurance company.
The solution to making sure companies pick suitable insurance for themselves in the China market is to work with an insurance broker, who will help negotiate better policy terms and well as ensure that contracts are sound, Cheung concluded.
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
