Industry News: China Announces 'Cash Before Cover'
- Samantha McKeag
- Nov 5
- 2 min read
Updated: Nov 11
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CHINA ANNOUNCES 'CASH BEFORE COVER'
Starting November 1st, 2025, companies looking to do business in China will be required to pay the full cost of their local insurance policy premiums up front before they can be considered officially covered.
The implications of this could be both beneficial and challenging as it will eliminate the majority of the financial risk, however, if insurers aren't prepared, the transition could be a lot more challenging.
Proactivity Will Be Key
Some key action steps that can be taken to ensure a seamless transition include:
Update internal underwriting and policy issuance processes to ensure premium is collected and cleared before coverage attaches.
Implement automated payment verification steps before policy binding or renewal.
Review and adjust grace periods, cancellation rules, and credit control procedures to align with CBC requirements.
Update policy wording to clearly state when coverage begins and the payment conditions.
Revisit master + local policy alignment, ensuring China’s CBC requirement is integrated into global programs.
Evaluate the impact on Difference in Conditions/Difference in Limits (DIC/DIL) structures when China can’t attach until payment is received.
Update internal guidance for multinational clients to avoid gaps in global program coverage during payment delays.
Work closely with global brokers to ensure consistent messaging and coordinated implementation.
Coordinate with local and global brokers to ensure uniform interpretation of CBC rules.
Inform reinsurers and adjust reinsurance contracts where premium timing impacts reinsurance attachment and reporting.
Establish a clear process for how CBC affects reinsurance recoveries when coverage begins later due to late premium payment.
Cash Before Cover: Final Thoughts
The implementation of ‘Cash Before Cover’ by the world’s second largest insurance market is sure to create a splash - especially as multinational insurance companies revise their administrative procedures and implement new policies and procedures to maintain consistent compliance across borders. This change will accelerate the need for disciplined premium-handling, efficient internal workflows, and tighter global-to-local alignment. It also opens the door for innovation — prompting insurers to rethink how they structure, administer, and communicate multinational programs. Organizations that are prepared to adapt with agility won’t just stay compliant, they’ll set a stronger standard for global program execution as they move into this new landscape.
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