Study On Punitive Damages In Insurance Law Under The Perspective Of Consumers’ Right Protection

In recent years, the insurance industry in our country has developed dramatically, which provides effective guarantee for people’s life. As a special kind of commodity, insurance also possesses consume attribute. But it should be differentiated from general goods consumption. And the concept of insurance consumer derives from this. The large-scale research about protection of insurance consumer rights started from 2000 in our country. And many insightful views about it are put forward by the academic circles, playing a positive part in driving the protection of insurance consumer rights. However, there is no consensus about the definition of the basic concept—insurance consumer. Although the concept has not been confirmed by insurance legislation in our country, there are discussions about problems concerning the protection of insurance consumer rights within academic circles and in regulatory documents released by China Insurance Regulatory Commission.In our country, regulations in General Principles of Civil Law, Contract Law and Insurance Law are applicable to insurance contract disputes. Although Insurance Law has been amended for many times, there are still some regulations and systems which cannot effectively regulate current market problems. In addition, because of the powerless supervision, insurers often harm the legal rights of insurance consumers by making use of their natural advantageous status, which can been seen from the statistical data and claim ration of recent years’ insurance dispute cases in our country. These phenomena lead to insurance consumers’ decreasing confidence in insurance and hinder the healthy development of the insurance industry.The reason for development difficulties of the insurance industry is that insurance consumption activities differ from general consumption activities. Because insurance contract is a typical kind of aleatory contract, contracting parties will easily take dishonest action for ultimate interests. Therefore, the insurance contract has extremely stringent requirements for the degree of honesty and the principle of utmost good faith becomes one of the most basic principles of it. Legal relationship of insurance is characterized by inherent information asymmetry since its birth. Both parties are in disadvantageous transaction position in some ways. However, as consumers and accrediting parties, applicants for insurance are in a more disadvantageous position than average consumers. The disadvantageous position of insurance consumers are easily taken advantage of by insurers and insurers may disobey the principle of utmost good faith and maliciously break the contract to gain their own interest. As for the advantageous position of insures, it means that insurers can effectively grasp the insurance market information, insurance contract, the commodification form of insurance, is formatted and the positions of both parties are not equal resulting from the inequality of the capacity to action of both parties. In addition, insurance consumption activities are also characterized by the misleading sales ways of insurance, public interest and reasonable psychological expectation of insurance consumers in purchasing insurance.This article summarizes the characteristics of insurance consumption activities listed above, intending to show that there are functional limitations in these aspects existing in traditional compensatory punishment system. The current principle of compensatory damages embodies the value orientation of thecompensation for damages in private law field, which is in line with basic principle of Contract Law. The basic principle refers to the pursuit of personal autonomy of will, intending to compensate for the loss of victims so that their interests can remain the same with that before the happening of the loss. It is undeniable that for the most time, it can fully settle the compensation problems of civil disputes concerning the autonomy of will. However, the ideas about freedom of contract and private law autonomy are based on the equality between both transaction participants. In insurance industry, it is obvious that the ideal transaction environment has changed: the strength gap between both parties is big; because of behaviors of dishonesty, insurers can gain more economic benefits than the compensation they make and thus, they can continue to act as they please; and traditional principle of compensatory damages cannot stop this phenomenon from occurring but, to some extent, encourages such phenomenon. There are limitations existing in the application of complementary damages to insurance contract. That is to say, the subjective psychological states of the victims are always ignoredwhen compensating, there lacks punishment and precaution for violation of contract resulting from the intention of gaining illicit benefits, which leads to the continuous happening of such violation behaviors and the legal relationship of insurance is limitedly regulated.Because of theparticular attribute of insurance consumption activities, insurers, to gain benefits, take some actions of dishonesty and legal rights of insurance consumers are harmed. Given this, our country has actively taken some measures which have worked well. Despite of this, many illegal actions still remain to be controlled. This article advises that punitive compensation system of Contract Law of the United States should be introduced. It tries to demonstrate the limitations of traditional compensatory damage system in dealing with legal relationship of contract and the correspondence between the unique function of punitive compensation system and the special attribute of insurance consumption relationship, hoping to introduce the punitive compensation system into the Contract Law of our country.There is few theory in academic circles of our country demonstrating the punitive compensation system and the contract law in combination. Concerning this, there are mainly two arguments. For one thing, whether or not the punitive compensation system of the Consumer Protection Law is applicable to insurance dispute cases. For another, whether or not the disadvantageous position of applicants of insurance in terms of information contradicts the punitive compensation system. Through demonstration, this article makes its own conclusions.In the last chapter, this article touches on the punitive compensation system in Contract Law of the United States and the problem of alienation during its applicable process. It also points out some issues which should be focused on when introducing the punitive compensation system into Contract Law of our country so that functional alienation can be avoided and positive effect of the system can be maximized.