The Exercise Of The Insurer’s Right Of Revocation In Fraudulent Insurance

In 2009,China’s Insurance Law was amended to introduce a “no defense clause”,and the discussion on the issue of “whether the insurer can exercise the right to avoid the contract under the insurance fraud” has become more and more enthusiastic,and different views have emerged in the theoretical circles and practice.In the academic community,there are two views on this issue: negative and positive theory.The positive theory holds that if the insured violates the obligation of truthful notification in the form of fraud,the insurer may,in addition to terminating the contract,also revoke the contract according to the Civil Code,and it supports that there are not general laws and special laws between the right to terminate a contact and the right of revocation;the applicant who deceives the insurer violates the principle of good faith and fairness should not be protected.The negative theory holds that no matter what degree of fault the insured violates the notification obligation,the insurer only have the right of rescission and can’t use revocation,and it supports“Lex specialis derogate Legi generalis”;the no defense clause has a historical development process,and it is a voluntary concession made by the insurer to promote the development of the insurance industry,which is inevitable and reasonable.In judicial practice,different regional courts have different views,with negative theory as the mainstream view,and do not support the insurer in exercising the right of avoidance in the case of fraud.The Supreme People’s Court has also repeatedly mentioned this issue in its draft judicial interpretations and deleted specific provisions from its official documents.Combined with the mutual criticism between the two theories,the key contradictions: whether the two provisions constitute general law and lex specialis,whether the two rights constitute a competition of rights,and whether the two systems constitute a competition of systems.By comparing the condition and the legal effect of the right to recession and termination,I have my own opinion: Article 16 of Insurance Law and article 148 of the Civil Code are not general and special,the two rights belong to the coexistence of rights rather than the concurrence of rights,and there is no institutional competition between the statutory.Then I concluded that the insurer should be allowed to exercise the right of contract avoidance.In order to improve the relevant regulations in China,it is necessary to further analyze and learn from the experience of extraterritorial legislation.Common law does not distinguish the revocation,however,uniformly adopts the expression of descriptive effects.Among them,the UK Insurance Act was drastically amended in2015 to provide different remedies to insurers based on the subjective state of the insured’s breach of the obligation to truthfully inform,and to provide exceptions to fraud applicable to no defense clauses.U.S.insurance law also imposes no defense clauses and develops clearer criteria for exceptions,including: serious fraud by the insured,circumstances in which the performance of the policy would undermine public policy,failure to meet the discoverability criterion,etc.The right of rescission under German insurance law is different from the short-term exclusion period and the maximum exclusion period in the case of fraudulent insurance application in the German Civil Code,and the law clearly stipulates that the insurer can only exercise the right of rescission of the contract if he is deceived.In the process of analyzing extraterritorial legislation,we summarize the enlightenment for China’s legislation and judiciary,including: clarifying the necessity of legal perfection,learning from civil law systems in terms of institutional structure,and learning common law systems in terms of judgment standards.Finally,for resolving the unreasonableness of China’s regulations,I make suggestions from two level: the legislative and judicial practice.For the Article 16 of the Insurance Law,we need to admit the co-existence between the rights,clarify the exclusion period of the statutory rescission right is extended,clarify the subjective state of applicant who default the obligation of truthful notification,and the causal relationship.In judicial adjudication,the subjective state of the insured should be strictly examined,distinguishing between “gross negligence” and “intentional” to prevent the insurer from abusing his rights,urging the insurer to perform its due diligence obligations,to promote the development of China’s insurance industry.