Chinese insurance companies have the capacity to pay claims but anyone doing business in the market must follow the proper processes, the Aon Advanced Risk Finance Conference has heard.

Aon China Chief Broking Officer Ernest Leung says questions about paying ability and the rule of law are raised whenever a new market opens.

“Looking at the financial position of Chinese companies, I am reasonably confident they have the money to pay,” he told more than 300 conference attendees in Melbourne last week.

Mr Leung says most Chinese insurers have set up different systems to deal with their international programs. “They care about their reputation in the international market and they handle the international market differently from their domestic business.”

But he warns of varying standards and service across insurers’ different branches.

“Never consider that one branch is the same as the other. Be careful in selecting your partner.”

Problems can arise with claims when the client and carrier have ignored processes around the sum insured and contract wording. “Never use a carrier that never asks a question.”

Mr Leung says the Chinese insurance market is growing slowly and he believes insurers’ caution is a good sign.

The conference also heard of falling rates and continued demand among reinsurers to write Australian and New Zealand risk.

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