Research On Applicant’s Obligation Of Making An Honest Disclosure

The obligation of faithful statement is the fundamental legal obligation of the insured when the insurance contract is about to be signed by the insured and insurer. The important information answered by the insured in response to the insurer’s question regarding the insurance commodity may bring influence on the judgement of risks made by the insurer. As a result, the insurance rate, even the decision of acceptance will depend on that information. Although China has revised the Law of Insurance in 2015, the new version does not contain the revised regulations on the duty of faithful statement. Instead, the regulations stipulated in 2009 are still effective. The 2009 version is relatively detailed and comprehensive compared to the old ones. However, there are still some defects about the rules of the obligation of disclosure.Firstly, the rules on the entity who perform the duty in Chinese insurance legal system have conflicts. One side, Article 16.1 points that the subject of disclosure is only the insured with no reference to insurant. On the other side, Article 222 in Maritime Law stipulates that the insurant shall perform disclosure with no reference to the insured. The conflict is bad for the realization of legislative goal. The Law of Insurance should make effort to promote the information exchange between two parties of the insurance contract and help the insurer to judge the risks correctly.Secondly, the performance of the statement obligation shall be done when making the contract according to the Law of Insurance, which is consistent with the regulations of other countries. However, the current rules as well as the judicial interpretation are ambiguous. Therefore it may be hard for the judges to find the correct legal basis. We hold that the duration of making contract starts from the offer issued by the insured and lasts to the acceptance made by the insurer. The insured shall perform the obligation during this period. Moreover, there are no detailed regulations on the performance duration in some special cases, such as the pre-acceptance of insurance premium and the reinstatement of contract, which needs more research.Thirdly, the performance method of disclosure in China only refers to Q&A by the insurer and insured. Since the awareness of insurance and statement obligation is still limited at present, it correspond to the development need of Chinese insurance industry to take the German form, Q&A in written form, as a reference.Fourthly, the disclosure duty may be waived if the insurer has already known the facts in China. And based on the Q&A mode, the insured may not disclose if the insurer does not ask. The extent of exemption is so narrow that the regulations shall be extended in practice.Lastly, the Law of Insurance in China lays strict responsibility on the violation of statement obligation. The insurer can terminate the insurance contract, be released from taking responsibility nor return the premium if the insured violate the duty deliberately. It is reasonable to stipulate like this. While it may be too rigorous to regulate that if the insured violate the obligation due to gross negligence, the insurer can terminate the contract, avoid taking responsibility but return the premium. It does not leave space for both parties to ease off. In other word, it does not allow both parties to adjust the contract to keep it effective. In the condition that the insured violate the duty out of slight negligence or no-negligence, no regulations can be applied. But the interest of the insurer may be infringed and shall be protected as the insured did not tell the truth. Thus the articles in German Insurance Law can be a reference that the insurer has the right to terminate the insurance contract if the insured violated the duty because of slight or no negligence.This thesis shall mainly discuss and analyze the issues listed above.