Online insurance: How to fulfil disclosure and explanation duties

With online insurance booming, dealing with the impact and challenges that the industry poses to application of laws and adjudication rules is a major concern to arbitrators, judges and professional insurance lawyers. In accordance with the challenges facing online insurance in China, this article will discuss the practical issues relating to model clauses and exemptions of insurance policies as prescribed in article 17 of the Insurance Law.

According to the said Article 17, an insurer is obliged to explain its model insurance clauses to the insured. In connection with any exemptions, it also requires the insurers to fulfil the obligation of disclosure and explanation to
the insured.

While these obligations pose no concerns for the conventional face-to-face insurance marketing model, which allows employees or brokers of insurance companies to take their time making the disclosure and explanation to potential policyholders, they present a tough legal problem for insurers running online insurance processes, where the insured are only able to understand the products from reading about them on webpages before making purchase decisions.