On The Doctrine Of Utmost Good Faith (Umberrimae Fidei) Of Marine Insurance Law

In the past ten years, the Doctrine of Utmost good faith (Umberrimae Fidei) had for seven times been arranged as the core of discussion of the international maritime law conferences. However, the research on this doctrine is still at a stage of messy and primary. This article is aimed to discuss the ways to modify Chinese marine insurance law by studying the Doctrine of Utmost good faith (Umberrimae Fidei). To research this topic, I used in this article the methods of historical, comparative and a colligation of philosophy, economics and law applications.The innovative production and conclusion of this article can be summed up as follows: Innovation one. This article brings forward a way to unify the understand on the Doctrine of Utmost good faith (Umberrimae Fidei) and a criterion to estimate it. The main contents including:a. the Doctrine of Utmost good faith (Umberrimae Fidei) is a law principle related but know from the Doctrine of Good Faith. It is a special law principle with the Doctrine of Good Faith and the Doctrine of Equity is its main contents and combines some specifically insurance rules.b. the Doctrine of Utmost good faith (Umberrimae Fidei) had been acknowledged as a general principle of insurance law by most nation's legislation and judicature. Its intention and extension develops as the development of insurance and corresponding social and economic environment.c. the Doctrine of Utmost good faith (Umberrimae Fidei) applies not only to the assured and the applicator, it also applies to the insurer and other parties participating in the insurance activities, and it also applies to judicial judgment related to insurance disputes.d. the Doctrine of Utmost good faith (Umberrimae Fidei) applies not only to the activities before the insurance contract is concluded, it extends to the whole duration of the insurance and also applies to the settlement of insurance disputes.Innovation two. Aimed at the duty of disclosure, this article points out some of the deficiency of Chinese current insurance legislation and brings forward several suggestionson corresponding legislation and judicial treatment. Mainly as follows:a. on the scope of disclosure, the current Chinese legislation provides that the assured must disclose "the facts that may influents the insurer to decide whether to accept it or charge a higher premium ". The current Chinese law does not introduced those world-widely acknowledged criterions such as "materiality", "prudent insurer", "inducement" etc. The Chinese Insurance Law (hereinafter called CIL)provides that there is no need for the assured to disclose information that the insurer did not enquire, while the CMC provides that the assured must disclose all related information, even not enquired by the insurer. This situation makes the criticized "duty of disclosure" seems more rafferty, nuclear and unfair. This article, on the basis of analyzing the historical cause of formation of the "duty of disclosure", and, in allusion to the change of the insurers' and assureds' ability to estimate risks and the advantage in getting information, points out that it is out of time to require the assureds to estimate the risks on the side of the insurer or prudent insurer. To make sure that the spirit of Utmost good faith (Umberrimae Fidei) is carried out, the author suggests treating those provisions reasonably before the law is modified. That is to say, to make a loose explanation of the provision of CMC while make a reverse explanation of article 17 of CIL.b. the current Chinese keeps silence on the exception of disclosure, this article points out that there is no need to disclosure the following information: law and regulations, situations minimizing the risks, facts inquired by the insurer, facts that the insurers should know in their ordinary business, those waived by insurer, facts included in warranty clause, facts that the assured does not know.c. On the duration of disclosure, the current Chinese law provides that it only applies to the time before the insurance is concluded. This article points out that the duty of disclosure should be extended to situations such as variation and renew of the contract.d. On the parties bear the burden of disclosure, the CIL provides that the applicator while the CMC provides the assured bears the duty of disclosure. The current Chinese law keeps silence on whether the broker or other intermediary parties bears the duty. This article points out that both the applicator and the assured bear the duty of disclosure. The insurance brokers also have an independent duty of disclosure. But the beneficiaryVIIof the insurance does not bear such a burden.e. On the legal effects of breaching the duty of disclosure, the current Chinese lawprovides that the insurer may rescind the contract. But whether the insurer must paythe assured depends on whether the breach is a subjective activity. This article suggestsresolving this problem in two ways: if the undisclosed fact will lead a prudent insurerto refuse the risk, then the insurer may rescind the contract and need not pay theassured. On the other hand, the insurer can only charge a higher premium.Innovation three. On the notify duty when the risk .of the insured subject increased, thecurrent Chinese law have many deficiencies. This article suggests modifying the currentlaw by setting three positive conditions and five negative conditions. This article alsopoints out that the legal effects of risk increase should be distinguish. In case the riskincrease is caused by objective matters, the contract should be maintained. In case it iscaused by subjective matters, the contract can be ended.Innovation four. On the insurer's duty of explaination, the current Chinese law only requires the insurer to definitely explain the exception clause. But the law keep silence on what constitutes "definitely explain", and the law does not require the insurer to disclose or explain other things. This article points out that according to the Doctrine of Utmost good faith (Umberrimae Fidei), the insurer also bears the duty to disclose to the assured all the relevant information about the risk and compensation. The requirement for the insurer to perform this duty is the same with that of disclosure.Innovation five. On the remedy when breaching the Doctrine of Utmost good faith (Umberrimae Fidei), the Chinese current only allows the innocent party to rescind the contract. Considering that the insurer may costs much in arranging investigation, check, reinsurance to decentralizes risks , also considering that rescind the contract has no favor to the assured, this article suggests modifying current law by allowing the innocent to claim for damage.