Underwriting Property Preservation Security Insurance for Cross Border Claims
Property preservation security insurance requires onshore Chinese guarantees backed by enforceable offshore bank collateral to mitigate cross-border subrogation risks.
Su Bao Xian
Meaning
Specialized insurance product used to facilitate litigation property preservation in the People’s Republic of China is commonly known by its local name. This su bao xian provides the necessary security to the court so that a plaintiff can freeze a defendant’s assets without depositing cash. It protects the defendant by promising that the insurer will pay for any damages if the freeze is later found to be wrongful.
The product is regulated by the China Banking and Insurance Regulatory Commission.
Market Adoption
Most litigation in China involving asset seizure now uses this form of security instead of traditional bank deposits. This su bao xian has become a standard tool for law firms and commercial entities because it preserves liquidity during long legal battles. The availability of the product has led to an increase in the number of asset preservation applications in civil courts.
It is now a multi-billion yuan industry involving dozens of major insurance companies.
Policy Issuance
The insurer evaluates the merits of the underlying lawsuit before agreeing to provide coverage. Under su bao xian, the applicant must submit their complaint and the evidence they intend to use at trial. If the insurer believes the case is likely to be dismissed, they will refuse to issue the policy.
This screening process helps to prevent frivolous asset freezes that would clog the court system.
Premium Rate
The cost of the coverage is usually a small percentage of the total amount of assets being frozen. This su bao xian premium varies depending on the complexity of the case and the duration of the litigation. Higher rates are applied when the risk of a wrongful preservation claim is perceived to be greater.
The premium is paid once and covers the entire period of the preservation order until the case is concluded.