Research On Legal Issues On Danger Increase Notification Rules

The essence of insurance is to spread the risks of the insured population and realize the consideration balance of risks between the premium and the insured object taking insurance contract as the medium.Danger increase notification rules are meant to restore the consideration balance by correcting the validity of insurance contract in case of significant danger increase for the insured object.However,we can see from applicable juridical practice of notification rules that there are a great deal of controversy,for example,whether the notification obligation is legal or contractual? Is notification obligation a part of exceptions? Are notification rules applicable to compulsory insurance? What’s the judgment criteria for significance? Is it necessary to distinguish the obligor’s subjective accountability? And so on.The judgment results in similar circumstances vary greatly,which seriously damages the judicial authority and fairness and reveals the problem of serious shortage of legislation supply.The analysis on basic theories shows that the legal basis for notification rules is utmost good faith principle and consideration balance principle,and circumstance change principle cannot be used as the legal basis for notification rules.Notification obligation is contractual in nature,and the insurer cannot be exempted only in accordance with insurance law but must state in insurance contract and perform the obligation of reminding and specifying.Danger increase can be classified into subjective danger increase and objective danger increase according to the obligator’s accountability in order to require the party at subjective fault to bear more serious legal consequences and promote and inform the obligor to actively maintain the consideration balance.While the classification of danger increase into contractual danger increase and noncontractual danger increase indicates that the notification rules in insurance law are meant to specify that the contractual danger increase circumstances will only lead to legal consequences accordingly if they meet the condition of “significance”.In order to restore the consideration balance of insurance contract as soon as possible,the time limit for notification of the obligator shall be interpreted as “immediate notification”,while there is no limit on the way of performing obligation.Through examining existing questions in dispute in combination with typical instances of legislation,this paper discovers that most countries take notification rules as the general rules in insurance law and the regulations in general rules,while China classifies notification rules into property insurance,which has improperly restricted the application of notification rules in some personal insurances;the idea that compulsory insurance is not applicable in practice is not proper because the internal relationship and external relationship between the two sides of insurance and the accident victim are confused.Significant danger increase shall contain three components of “significance”,“continuity” and “non-valuation” and shall be uniformly included into the substantive criteria of “danger increase seriously damages the consideration balance of insurance contract,and the degree of damage is sufficient to drive the insurer to decide to increase the premium or cancel the contract”.China’s legislation has not highlighted the core essence,and several circumstances listed cannot cover the complicated situations in practice.In current three legislation models related to obligation subject of “single subject”,“composite subject” and “selective subject”,“selective subject” is the most advantageous one and is more proper than China’s regulations only classifying the insured as the obligation subject.In identification criteria of causal relationship,“principle of proximate cause”meets the systematic requirements of insurance law.It is stricter than “conditioning theory”,is helpful for protecting the benefits of the insured,can prevent the insurer from “avoiding responsibilities” and is more in line with the objective reality than “compromise theory”,so it shall be explicitly stipulated in legislation.For the legal effect,China’s regulations on notification rules neither distinguish the different effects between subject and objective danger increase nor stipulate the legal obligation exemption circumstances.In circumstance of performing appropriately,China’s regulations on notification rules do not clearly stipulate the rights relationship between the premise increase and the cancellation,and the time limit for performance of right,and in circumstance of failing to perform,they do not define the legal effect in case of no accident or invalid causal relationship of accident.In order to improve the danger increase notification rules in insurance law of China,this paper gives suggestions as follows: first,we should properly expand the application scope of notification rules.The application scope of notification rules should be expanded to “insurance class 3” of personal insurance from perspectives of property insurance and personal insurance classification and be expanded to internal relationship of compulsory insurance from perspectives of voluntary insurance and compulsory insurance classification.Second,it suggests to further define “significance”,“continuity” and “non-valuation” as three elements to identify “significant danger increase”,adhere to substantive judgment criteria in specific judgment,and unify the legal interpretation methods with legal methodology in judicial cases to avoid arbitrary judgment.Third,it suggests to add the policyholder as the obligation subject of notification rules by reference to the “selective subject” model.Fourth,we must take “principle of proximate cause” as the judgment criteria for causal relationship between danger increase and insurance accident,which will not only meet the systematic interpretation but also conform to the objective insurance environment in China.Fifth,we should improve the legal effect of notification rules.In the event of performing notification obligation appropriately,we should distinguish between subjective and objective factors,weaken the legal effect of objective increase,keep the insurer’s right of choosing premium increase or cancellation,and define one month as the default time limit for the insurer to exercise right.In the event of failing to perform notification obligation,we should state that the insurer is entitled to increase the premium or cancel the contract when no accident happens and distinguish the effects of invalid causal relationship between subjective and objective factors.At the same time,we should state the legal obligation exemption circumstances such as the insurer knows,should have known or expressly requires no notification,for the purpose of social public interests,for the benefits of the insurer,etc.