Insurance companies fulfill the principle of utmost integrity

On the constraints of the principle of utmost good faith on insurers

Source: "Consumption Guide·Theoretical Edition" Author:

[Abstract] Regarding the principle of maximum good faith The existing defects and the impact on the development of the insurance industry are discussed. The theoretical and practical basis for the insurer to bear the greatest good faith responsibility is discussed. Combined with the shortcomings of my country's insurance legislation on the restraint of the insurer, it is proposed to strengthen insurance based on the principle of greatest good faith. Views of human constraints, with a view to improving the principle of utmost good faith and my country’s insurance legislation.

[Keywords] Principle of utmost good faith Insurer and policy holder

The principle of good faith is the basis of all countries’ civil and commercial laws. It is regarded as the “Emperor’s Clause” by scholars. Article 4 of the General Principles of Civil Law of my country Article 1 also stipulates the principle of good faith as a basic principle of my country's civil law. Due to the accidental nature of insurance contracts, the principle of good faith plays an important role in insurance law that is unparalleled in other laws and is known as the "principle of utmost good faith in insurance." Understanding the principle of utmost good faith is an important prerequisite for understanding insurance law and entering into insurance contracts. Improving the principle of maximum good faith is one of the important ways to improve the insurance system and protect the legitimate rights and interests of the insurer and the insurance counterparty.

In the early days, the principle of utmost good faith in insurance was mainly a tool for insurers to restrain policyholders. With the development of the insurance industry, in order to protect the interests of policyholders and prevent insurers from making malicious defenses, insurance laws in various countries have been revised one after another, extending this principle to apply to both insurers and policyholders. Traditional insurance law theory has a relatively complete discussion on the binding force of the principle of utmost good faith on policyholders. This article intends to discuss the application of the principle of maximum good faith to insurers, with a view to improving the principle of maximum good faith and insurance legislation.

1. The meaning and content of the principle of utmost good faith

The so-called principle of maximum good faith means that in the process of entering into an insurance contract, the parties to an insurance contract should act in the utmost honesty and credit, without Conceal all important information regarding the conclusion of the contract in order to establish a fair and reasonable contract.

Looking at the legislation of various countries, the basic content of the good faith principle in insurance law generally includes three aspects: obligation to inform, guarantee, waiver and estoppel.

1. Obligation to inform. The obligation to disclose means that the policy holder shall truthfully tell the insurer important facts related to the subject matter of the insurance when entering into an insurance contract. Regarding the content of notification, the policy holder should disclose important facts when applying for insurance. The so-called important facts refer to facts that can influence a normal and prudent insurer to decide whether to accept insurance or determine the insurance rate. Regarding the form of notification, my country’s insurance law stipulates that it is a question-and-answer notification form, that is, all questions asked by the insurer in writing are considered important facts, and questions that the insurer did not ask are not important facts, and the policy holder has no obligation to disclose. If the policy holder deliberately conceals the facts and fails to fulfill the obligation to truthfully inform the insured, or fails to fulfill the obligation to truthfully inform due to negligence, which is enough to affect the insurer's decision whether to agree to underwrite or increase the insurance rate, the insurer has the right to terminate the insurance contract.

2． ensure. Guarantee refers to the agreement between the insurer and the policy holder in the insurance contract that the policy holder guarantees the action or inaction on a certain matter, or guarantees the authenticity of a certain matter. It is usually attached to the insurance policy in writing or by agreed terms, such as a stipulation that the policyholder should properly keep the subject matter insured. There are also some warranties that are not written in words, that is, implied warranties. Guarantee is the basis of the insurance contract. If there is any violation, the insurer can obtain the right to terminate the contract or be not liable for compensation.

3． Waiver and Estoppel. Waiver and estoppel mean that once the insurer waives the rights arising from the policyholder or the insured's breach of notification obligations or guarantees, it will not be able to go back and claim the waived rights against the other party in the future.

2. The necessity of binding the insurer in accordance with the principle of utmost good faith

(1) Bias in understanding:

From the perspective of legal theory and insurance law regulations , the principle of utmost good faith requires all parties to an insurance contract to abide by honesty and credit to the greatest extent, that is, this principle is binding on both the insurer and the policyholder. But when it comes to its specific content, some scholars believe that the possibility of an insurer violating the principle of utmost good faith is extremely small, and the principle of maximum good faith mainly binds policyholders. "This understanding comes from an isolated study of the contents of Articles 17 to 21 of the British Marine Insurance Act 1906, without conducting a comprehensive demonstration of the entire insurance activity."

Specific to legal norms and judicial practice, the emphasis is often placed on the truthful disclosure and warranty obligations of both parties, while the incontestable defenses of waiver and estoppel are underused, thus weakening the binding force on both parties, especially the insurer. This makes the principle of utmost good faith de facto a contractual criterion that only binds policyholders.

(2) Real-life problems:

Because our country is currently in the transition stage of the economic system, various laws and regulations for the construction of the credit system are not sound enough, and China’s insurance industry is still in its infancy. Lately, especially the extraordinary development of more than ten years, the insurance market has seen unfair competition and extensive scale expansion, which has led to frequent fraud by insurance companies and the problem of misleading or even defrauding policyholders to varying degrees. The main manifestations are: first, the insurance company’s business information disclosure is insufficient, and the policy holder cannot understand the insurance company’s assets, liabilities, solvency and other integrity-related information, and can only make judgments based on subjective impressions and the introduction of the agent; second, the authenticity The original intention of the notification principle is to protect the interests of insurance companies, but some insurance companies abuse this right and refuse to pay insurance premiums at will; third, some clauses in the insurance contract limit the conditions for the contract to be effective, but the insurance company fails to do so. Provide due explanation to the policy holder on the meaning of this clause and the possible legal consequences, causing the policy holder to mistakenly believe that the contract has come into effect after paying the insurance premium, and cannot take extraordinary measures to remedy the situation; fourth, the overall quality of the insurance agent team There are many good and bad practices, and insurance sales scams are endless. There have even been lawsuits caused by insurance agents pretending to sign insurance documents, which has damaged the industry image and credibility of insurance companies. Fifth, insurance companies "focus on business development and neglect claims; focus on premiums and neglect management." It creates a bad impression on the society that "it is easy to get insurance but difficult to claim; quick to collect money but slow to pay compensation".

(3) The author’s point of view:

Based on the above-mentioned biased theoretical understanding and existing problems in reality. The author believes that the insurance industry has developed into modern times, and both the law and market demand have undergone great changes. It is not conducive to the further development of the insurance industry to remain in the past understanding of the principle of utmost good faith. The basis of insurance activities should apply to the policy holder as well as the insurer, so that a balance of interests between the insurer and the policy holder can be achieved. This is because:

First, in terms of social impact, although the possibility of the insurer violating the principle of utmost good faith is less than that of the policyholder, the impact on the insurance industry is huge. The policyholder's violation of the principle of utmost good faith is a scattered single act, and it is also an obvious illegal act; while the insurer's violation of this principle is a common business behavior, a hidden illegal act, and it is often difficult for the policyholder to find the basis for it to bear responsibility. Although this unfairness allows the insurer to evade responsibility for a while, the damage to society is long-term and profound. It makes it difficult to expand the insurance business, reduces people's ability to resist risks, and increases social instability. .

Secondly, from the perspective of the establishment of insurance contracts, our country adopts the principle of non-responsibility for the establishment of insurance contracts. Article 12 of my country's "Insurance Law" stipulates: "Insurance requirements raised by the policy holder must be approved by the insurer." Underwriting, and reaching an agreement on the terms of the contract, the insurance contract is established. "That is, the insurance contract is established through the offer and acceptance, and the law does not require it to be in writing before it becomes effective. In most cases, the insurance policy is issued after the insurance contract is established. If the insurer fails to inform the relevant contents of the policy in advance, it then cites the relevant restrictive clauses in the policy that the policyholder does not know or understand to defend itself. , or refuse to assume insurance liability by citing insurance regulations that the policy holder is unaware of. This is inconsistent with the procedures for establishing an insurance contract stipulated in our country's laws and is also unfair to the policy holder.

***3 pages: Previous page 1[2][3]Next page

Previous article: A brief discussion on the principle of utmost good faith in insurance contracts

·Principle of Maximum Good Faith

< p>·Analysis of problems and suggestions existing in the principle of maximum good faith in insurance

·Principle of maximum good faith and moral hazard defense

·Insurance bottlenecks and the principle of "maximum good faith"

·Issues that should be paid attention to when applying the principle of utmost good faith in insurance

·On the principle of utmost good faith in commercial insurance

·On the principle of utmost good faith in motor vehicle insurance

·The principle of utmost good faith is the basis for the healthy development of the insurance industry

·On the significance of the principle of good faith in insurance law

·The application of the principle of good faith by insurance companies and that of general enterprises Comparative research

Free legal consultation

What should you do if you encounter legal problems? Come and ask questions! Thousands of experts will answer your questions within 24 hours!

Free consultation point Enter here>>

Ranking of popular articles in this column·Analysis of problems and suggestions on the principle of utmost good faith in insurance (294 times)

·On the significance of the principle of good faith in insurance law (191 times)

·On the principle of greatest good faith in commercial insurance (157 times)

·The principle of greatest good faith and moral hazard defense (94 times)

· A brief discussion on the principle of utmost good faith in insurance contracts (87 times)

·Issues that should be paid attention to when applying the principle of utmost good faith in insurance (84 times)

·Thinking about using the principle of utmost good faith in insurance (80 times)

·Principle of utmost good faith (72 times)

·Why insurance should follow the principle of maximum good faith (68 times)

·The largest insurance credit Economic analysis of the principle of good faith (56 times)

Extended reading: How to buy insurance, which one is better, and step-by-step instructions to avoid these "pitfalls" of insurance