Several municipal government agencies in Beijing have jointly issued an exposure draft for an interim administrative measure that would make it mandatory for building owners to acquire inherent defect insurance for three categories of residential buildings in the Chinese capital.

The agencies are the Beijing Municipal Commission of Housing and Urban-Rural Development, the Beijing Municipal Bureau of Local Financial Supervision, and the Beijing bureau of the CBIRC.

The exposure draft, seeking stakeholders' feedback, states that the categories of residential buildings to be covered by this class of insurance are new, rebuilt and expanded residential projects.

The draft administrative measure stipulates that an insurance company shall prepare a "Notice of Project Quality Inherent Defect Insurance", which will set out the insurance coverage amount, insurance period, start time, the insurance claims process, units responsible for insurance claims and their means of contact methods.

The draft measure also states that if the building owner finds that the project has quality defects, he may file a claim with the insurance company. After receiving the claim application, the insurer shall despatch a site survey within two days. The insurance company shall decide on the claim within seven days of receiving it; but if the situation is complicated, the claim has to be decided within 30 days. The insurance company shall make a claim payout within seven days of reaching a compensation agreement with the construction unit.

Beijing's move is likely to be followed by other cities across China.