Insurance The Termination Of The Contract System

Rescission of insurance contract refers to such a legal act that is one party of the insurance contract who has the right of rescinding terminates it in the useful-life of contract after it is valid. The focus of system of rescission of insurance contract is the right of rescinding, it belongs to formation right."No risks, no insurance". Insurance is a kind of mechanism that can accumulate and disperse risks, which realizes risk-sharing among the majority of people. However, insurance transactions are characterized by asymmetrical risks information, that is, insurance objects are closely related to or are controlled by the policyholders or the insured. Policyholders or the insured enjoy the advantage that they can evaluate the risks based on concrete information. The profit-seeking motivation is most likely to seduce the policyholder or the insured to break the basic principles of insurance, namely, the principle of good faith and the principle of balance of consideration. Therefore, it is necessary to endow the policyholders with the right of terminate a contract so as to correct the unbalance of consideration. Meanwhile, the increasing gap between the economic strength, the ability of bargaining and information-obtaining of the insurer and insured puts the insured in the dilemma of "either accepting the adhesion contract or leaving the counter". Asymmetry of trade information also leaves the insurer with the intention of defrauding, which shakes the rational foundation of insurance- dispersing risks. The principle of good faith and the principle of balance of consideration are the legal basis for the right of terminating insurance contract and reasonable distribution of rights. It is thus the obligatory choice to balance the interests between the two contracting parties and properly limit the insurer's rights of contract-terminating so as to maintain the fairness of transactions and the balance of consideration.The contract-terminating system, as a guarantee mechanism for autonomy of private law and also a protection mechanism for contract observant party, has unique function of systematical value in insurance contract system. However, the contract-terminating system, which is also a "destructive" mechanism of insurance contract, exerts great influence on the interests of the two contracting parties in an insurance contract. Therefore, the contract-terminating rights must be strictly limited by law so as to make them in accordance with the legal purposed. Nevertheless, there are some defects in our relevant legislation of insurance-terminating system due to inadequate legislation theories on insurance and undeveloped insurance industry. In the light of this, the thesis aims to systematically explore the perfection of the insurance-terminating system.The thesis is divided into four chapters as follows:Chapter One concerns "the general analysis of system of rescission of insurance contract". To begins with, it defines the concept of the termination of an insurance contract and analyzes the quality of the contract-terminating right, that is, it belongs to formation right. It then goes on exploring the value of the termination of an insurance contract. Finally, it illustrates the legal basis for distribution of the termination right, that is, we should implement the principle of good faith and the principle of balance of consideration and properly limit the insurer's right to terminate contracts so as to maintain the balance of interests between the two contracting parties.Chapter Two makes a comparative analysis and theoretical exploration on foreign insurance contract termination system from four aspects (the causes of termination, the time limit and the modes of exercising the contract-terminating right, the prevention system and legal consequences of exercising the contract-terminating right), which provides legislative references for reconstruction and perfection of China's insurance contract termination system. It also enables the author to make further analysis on the deficiency of our present insurance contract termination system.The third chapter"the defects of the present insurance contract termination system" firstly analyzes our present insurance contract termination system and on basis of this, points out the defects of the system with reference to the content in Chapter two.Chapter Four, "the solutions and suggestions to the perfection of China's present insurance contract termination system", acts as the footing and focus of this thesis. The author suggests we should perfect our present insurance contract termination system from the following five aspects. Firstly, tighten the limit of special clause, secondly, limit the insurer's contract-terminating right. Thirdly, provide more preferential systems for protecting the interests of the insured. Fourthly, construct the standard procedures for insurance contract rescission and the system of loss of right. Last but not the least, establish a united regulation system for insurance contract rescission.