insured-against incident

By Guan Feng King & Wood’s Finance Group

This article continues to discuss Insurance Benefits for Banks as Mortgagees. The first part of this article was published on Chinalawinsight on January 2012.

III. Assignment of Insurance Benefits

In practice, in order to insure the debt, the lender bank often signs an insurance assignment agreement with the borrower, in which the borrower will assign all insurance benefits(1) under the related property insurance policy(2) to the lender bank. The assignment of rights becomes effective at the moment when the assignment contract is signed, or when the borrower defaults on the loan. Meanwhile, the endorsement slip, in which the insured designates the bank as the "first beneficiary" under the insurance policy, confirms the rights of the bank. To evaluate the feasibility of the insurance assignment contract, the fundamental approach from an insurance law perspective is to assess the nature of the insurance benefits assigned.

Continue Reading Insurance Benefits for Banks as Mortgagees (Part II of II)

作者:关峰 金杜律师事务所融资

本文分两部分刊登, 2012年1月16日金杜法律博客(Chinalawinsight)刊登的了本文的第一部分。文章第二部分将继续对《文件名》进行解读。

三、保险收益(insurance proceeds)的转让

从目前的行业惯例来看,为了保证借款人偿还贷款,银行往往会与借款人签订保险转让合同,约定借款人向银行转让相关财产保险单(1)项下的所有保险收益(2)。权利转让可能发生在转让合同签署之时,也有可能发生在借款人违约之时。与此同时,保险公司出具批单,以将银行列为保险单项下第一收益人(“first beneficial”)的方式,确认银行的权利。如果要判断这种转让保险收益行为的可行性,就必须从基础理论出发,了解保险收益转让的实质。

Continue Reading 抵押贷款项下银行获得贷款抵押物保险收益法律问题研究(2)

By Guan Feng King & Wood’s Finance Group

I. Introduction

Banks usually require a borrower to provide a mortgage on their property as security for the bank’s loan. However, under China’s laws, a mortgagee is not entitled to directly receive insurance benefits or indemnification relating to the mortgaged property. If the mortgagee cannot be directly indemnified when the mortgaged property suffers damage or loss, the mortgagee bears the risk of being under-secured on its loan since it does not have a priority right to the insurance proceeds. Although the mortgagee can seek indemnification from the borrower if the borrower has been reimbursed with insurance benefits, ideally the bank should directly receive indemnification for the loss in value of its security.

In practice, the lender bank usually requires the borrower to insure the mortgaged property and designate the bank as the "first beneficiary" in the property insurance contract. In this way, the bank can directly obtain indemnification if the mortgaged property suffers damage or loss due to insured incidents. However, under the Insurance Law of the People’s Republic of China ("Insurance Law"), the term "beneficiary" is only defined in life insurance rather than in property insurance. On September 23, 1992, the Department of Real Estate Credit of the Construction Bank of China promulgated the Interim Measures of Employees Mortgage, which defined the term of "first beneficiary". However, the Measures for the Administration of Individual Housing Loans promulgated by the People’s Bank of China on May 9, 1998 phased out the "first beneficiary" concept. Thus, since there is no definition for "beneficiary" in property insurance under China’s current laws, the question of whether such a "beneficiary" is entitled to any direct claim to indemnity remains a myth in the property insurance contract. In order to clarify this issue, the High Court of Shanghai, in its 2009 and 2010 White Paper on Trial Judgments in Financial Cases, instructed that a beneficiary can only be specified in a life insurance contract according to the relevant provisions of the Insurance Law and instructions of the Supreme Court of China.

Continue Reading Insurance Benefits for Banks as Mortgagees (Part I of II)

作者:关峰 金杜律师事务所融资




Continue Reading 抵押贷款项下银行获得贷款抵押物保险收益法律问题研究(1)