Study On Insurer's Contract Rescinding Right

Insurance is the system which the human being creates in order to resist dangers. It gathers people together to make up a group, when a member of the group has an accident, he or she can get some economic compensations and the danger will be dispersed in this way. In modern society, insurance has been becoming one of the most important ways of reconciling dangers and providing the indemnification. China enacted the Insurance Law in 1995 and modified it in 2002. The Insurance Law covers exhaustive stipulations on the insurance contract, insurance company, insurance management, insurance supervision and legal liabilities. Insurance contract rescinding system is an important part of the Insurance Law. The contract rescinding system itself has a bi-directional capability: for one thing, it can defend insurer's legitimate rights and interests. On the other hand, it may give insurers an excuse to abuse the rescinding right and cause damage to the applicants or the insured. As the insurance industry of China is still on its initial stage, insurers often make adhesive contracts and abuse the rescinding right by taking advantage of their economic or technical status. Such actions no doubt will shatter the hope of the insured, which means"no worry with the insurance."Furthermore, these deeds may reduce the insurer's reliabilities and affect the development of the insurance industry of our country.Five parts are included in this article. The first part introduces the concept and character of insurer's contract rescinding right. This part starts with the concept and character of the right, then goes on to explain two main theory bases of insurer's contract rescinding right: the principle of utmost good faith and the principle of balance of consideration. At last, the author brings up the idea that the fundamental purpose of insurer's contract rescinding right system is to protect the applicant's legitimate rights and interests. The second part inquires into different categories of the cause of the insurer's contract rescinding right. It is the central part of this article. According to the Insurance Law and other regulations concerned, the article divides the reasons into four groups, which contains: fundamental breach, fail to perform the obligation of making an honest disclosure, the objective danger increases and the time pass of an effective duration. Besides, some comments about the drawbacks of the law or regulations concerned are given. The third part is about the way and the restriction of the implementation of the insurer's contract rescinding right. This part respectively discusses the main body, the relative person, the way and the restriction of the implementation. The waiver and estoppel regulations are led into this part as a successful system in Anglo-American insurance law. The fourth part discussed the legal consequences of implementing the insurer's right to rescind a contract. This part gives an analysis to the effect of the implementation and the matter of damage compensation, which mainly belongs to the matter of returning of the insurance premium. The last part is the conclusion remark.