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Insurance Claims in Hong Kong Explained

Published on: 26 January 2022 by Michael Lamb

Nothing is more important to insurance than the concept of claims. As a policyholder you require the assurance that when you purchase any insurance plan, you’ll receive some sort of benefit should you experience a loss. As such, an insurance company’s ability to successfully and properly satisfy its claims obligations will be critical to the organization’s success.

Simply put; no one is going to buy an insurance policy from an insurance company which doesn’t settle claims, or takes an unreasonably long time to issue a benefit.

Policyholders should never be worried about submitting a claim. The reason that a policy of insurance is taken out is to ensure that there is assistance following a loss. Claims, and subsequent settlements, are the entire reason for insurance existing, so all policyholders should be able to request a claim payment for a covered loss secure in the knowledge that they will receive a benefit.

Following from this, an insurance company should never refuse a claim lightly. In fact, in Hong Kong, the Code of Conduct for Insurance Companies as issued by the Hong Kong Federation of Insurers and regulated by the Insurance Authority states that Insurers undertake to provide a full explanation to the policyholder as to why any given claim is rejected. This ensures that there is transparency for a policyholder, and allows them to understand how and why their claim is being handled by the insurance company.

Having said this, it is important to note that there are a number of legal requirements which must be satisfied in relation to claims handling in Hong Kong.

Claims Handling Requirements in Hong Kong

In order for a claim to be successful submitted and handled by an insurance company it must be valid. A valid claim is one which meets the requirements of the insurance contract, and any other relevant legal necessities within the jurisdiction of the insurer. In every claim situation in Hong Kong there are a number of separate criteria which must be evaluated to ensure that the claim is both contractually, and legally correct.

These criteria include, but are not exclusive to, the following:

Fraud by, or on Behalf of the Insured

The first major consideration, which will defeat any claim if discovered to be true, is whether fraud is discovered (in any form) in relation to the claim. If fraud has been committed, either by the policyholder or on behalf of the policyholder then the entire contract of insurance can be cancelled and no claims will be paid.

The issue of fraud is present at every level of an insurance contract, especially in relation to a consideration like Utmost Good Faith. If at any time (from application to claim) you intentionally omit any material information or otherwise commit an act of intentional or unintentional fraud, you will likely be found out and forfeit the right to receive any satisfaction under the policy.

Policy Must Be in Force and Premiums Current

This consideration may seem slightly obvious, but in order to receive a claim under an insurance policy (any insurance policy) the coverage must be in force. This is to say, the contract of insurance must be current, must not have elapsed or in arrears, and must not have reached its termination or expiration date.

If, for example, your Term Life Insurance has passed the end of the term then no claims can be made. Adding to this, if your Car Insurance has reached its expiration date and you are in an accident one day later, the insurance will not satisfy any claim you make (unless such terms and conditions exist in the contract of coverage). In order to place a successful claim, your policy must be “active.”

As a part of this, you must have paid and been fully paid up on your premiums.

Some types of insurance policy may offer you a “grace period” during which you are not required to pay a premium but are still covered. However, if you make a claim and subsequently fail to pay your premium then the insurance company will normally initiate legal action against you to recover their costs (and all costs associated with the claim).

Covered Risks and Exclusions

Arguably the most important aspect of consideration for ensuring your claims are successful under any insurance policy is with respect to the type of risk you’ve experienced. Is that risk covered under the policy? As a policyholder, and under Hong Kong law, it is up to you to prove that the loss you have experienced falls within the policy’s scope of coverage.

Under a policy like Property All Risks, identifying whether the loss is covered is quite easy. The insurance policy states that it covers “all risks” so a claim will be honored against all losses unless otherwise specifically excluded from the policy. However, in the case of specified perils, like Property Fire Insurance, only the “insured risk” is covered – the policyholder will need to prove that the Proximate Cause of the loss was, in fact, the covered risk.

As Exclusions have been mentioned, it is also important to state that any claim resulting from an excluded risk will never be covered under a Hong Kong insurance policy. Things like Acts of War or terrorism are standard, universal exclusions on most insurance plans. Consequently, if your loss is caused by an act of war (unless you’ve purchased insurance which specifically covers this) it is likely that the claim will be rejected. However, the burden of proving that an exclusion applies to any given claim falls on the insurance company; if the insurer rejects a claim on the basis of an exclusion, then it will need to provide proof of this reasoning.

Hong Kong Insurance Claims Operation and Handling

The exact mechanism by which you will submit a claim and receive compensation or coverage will vary depending on the insurance company you choose to purchase your policy from, and even the type of product you purchase. For example, many car insurance claims are much easier to make compared to a complicated Errors and Omissions case.

In most cases, as a policyholder, you have a duty to perform or undertake certain actions:

  • Inform the insurer as soon as possible following a loss
  • Inform the insurer in the event there is a “possibility of a claim.”
  • Cooperate with the insurer as much as possible
  • Minimize the loss as much as you are able
  • Do not jeopardize the insurers rights
  • Do not commit fraud

Some of these points are self-evident. Others, require more explanation. For example, with respect to “not jeopardizing the insurer’s rights,” what does this mean?

Car Insurance is a great product to use here.

After a car accident many people, who assume they are at fault, will say “sorry” or state to the other party “that was totally my fault.” Doing this could actually void your insurance contract, as you have just admitted liability even if you weren’t at fault. By going on record, and stating that you feel remorse for maybe having caused a loss, or that you were responsible for a loss, you are jeopardizing the insurers rights. You have assumed liability where none may, in fact exist.

Your Insurance Claims in Hong Kong

As previously stated, claims are at the heart of all insurance – claims are the reason for insurance existing, the entire point of the entire industry. If you experience a loss while holding an insurance product, you are entitled to receive compensation or a settlement because of that loss.

However, in practice life is slightly more complicated. As insurance is a financial product, governed by a long legal history and bound by contracts with respect to individual policy documents, there are a large number of criteria which must be considered with respect to the settlement of any claim. Remember, insurance is the equitable exchange of risk – and especially in a claims scenario, equality on both sides of the equation is extremely important.

If you’re worried about your ability to receive settlement from any Hong Kong or international insurance policy, then let CCW Global help you. Our expert Hong Kong Insurance brokers are able to provide you with the free advice you need to see whether your insurance coverage is doing what you need it to do. With our many years of experience in the Hong Kong and Asian insurance markets, assisting customers with the ins-and-outs of their coverage, we can assist in even the most complicated of claims scenarios.

For more information on how we may be able to best help you, or to learn more about the claims handling process for your insurance plan, please Contact Us Today.



Author: Michael Lamb

Michael Lamb is an insurance industry professional with many years of experience within the Hong Kong Insurance market. Focusing on APAC coverage issues, Michael is able to provide extensive analysis and insight to a range of pressing topics. Previously, Michael provided insurance broker Globalsurance.com with their most highly valued articles and was a key influence in the development of all the content on Pacificprime.com, Michael has a passion for insurance matched by few others in the region.

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