Uberrimae fidei is considered the basis of a reinsurance contract. To make reinsurance affordable, a reinsurer cannot duplicate expensive processes such as insurance and claims processing costs. You need to rely on the fact that the primary insurer can handle these tasks adequately. In return, a reinsurer must properly investigate and reimburse an insurer`s good faith claim payments. The Insurance Contracts (Amendment) Act 2013 reformed the fiduciary duty for contracts entered into or renewed after 28 June 2013. Importance: According to section 45 of the Insurance Act 1938, in the case of life insurance, a period of two years is set to question the validity of the policy by the insurer on the basis of false information in the answers to the questions on the application form or in a report or document leading to the issuance of the policy. Article 45 provides that, after two years from the date of its conclusion, no life insurance policy may be called into question by an insurer on the ground that a statement has been made in the insurance proposal or in a report by a doctor, expert or friend of the insured. or in any other document that led to the issuance of the Policy was inaccurate or incorrect. The insurer cannot escape the consequences of the insurance contract by simply proving the inaccuracy or inaccuracy of the statement made in the application form, but must prove in accordance with § 45 that the life insurance policy was obtained by fraudulent deception. In order to avoid the policy of fraudulent concealment under the provisions of § 45, “it must be convincingly demonstrated that the case in question was knowingly concealed”.
The insurer must also demonstrate: (1) that the statement related to a material matter or suppressed facts whose disclosure was material, and (2) that it was made fraudulently by the policyholder and (3) that the policyholder knew at the time of the presentation that the statement was false or that it suppressed facts whose disclosure was material. The principle of good faith requires that all parties disclose any information that could influence their decision to enter into a contract between them. In the case of the insurance market, this means that the agent must disclose critical details about the contract and its terms. Unlike insurance contracts, most trade agreements do not follow the doctrine of extreme good faith. Instead, many are subject to the booking sender or “buyer beware.” “Insurance is a contract based on speculation. The particular facts on the basis of which the contingency is to be calculated are generally known only to the insured. Therefore, the insured must disclose the exact nature and potential of the risks they are transferring to the insurer (which in turn can be sold to a reinsurer), while the insurer must ensure that the potential contract meets the insured`s needs and benefits. The doctrine of extreme good faith was widely discussed in QBE Seguros v. Carlos Marales-Vasquez, No. 15-2091 (PR Sept.
28, 2016), QBE Seguros (“QBE”). In this case, QBE issued Carlos Morales-Vazques (“Morales”) with a transportation insurance policy for his 48-foot yacht. In October 2014, the yacht suffered damage from the fire, Morales informed QBE of the damage and QBE immediately began investigating the claim. The adjuster discovered that around 2010, a differential insurance company had adjusted a yacht insurance claim for Morales. Morales did not disclose this incident in his insurance application to QBE. The app also asked Morales to describe his boating experience by listing the boats he owned or operated. When Morales was questioned under oath, he admitted to owning five vessels that were not included in his application to QBE. § 13 of the law requires each party to the contract: However, the fact that a contract is concluded in the highest good faith does not mean that it establishes a general fiduciary relationship. The relationship between the insured and the insurer is not comparable to the relationship between, for example, the guardian and ward, the principal and the representative[3] or the trustee and the beneficiary. In the latter cases, the inherent nature of the relationship is such that the law has traditionally introduced general fiduciary duties. The insurer-insured relationship is contractual; the parties are parties to an arm`s length agreement. The principle of uberrima fides does not affect the independent nature of the agreement and cannot be used to establish a general fiduciary relationship.
The insurance contract, as mentioned above, imposes certain specific obligations on its parts. However, these obligations do not introduce general fiduciary duties into each individual insurance relationship. Before such fiduciary duties can be introduced, there must be certain circumstances in the relationship that require their imposition. It is important to note that when a case before the court concerns a transportation insurance issue, federal marine law applies, provided there is a precedent. In the absence of such a precedent, the court will follow Wilburn Boat`s logic and apply the substantive law of the state. Uberrimae fidei is certainly different from most state laws. Although overwhelming case law recognizes the vitality of uberrimae fidei, there is now technically a split between circuit courts. Thus, it is conceivable that if the right case exists, the U.S.
Supreme Court could grant the certiorari. This principle of contract law requires the buyer to exercise due diligence before purchasing. In other words, a seller only has to disclose the information requested by the buyer. Cases in which the insured deletes essential facts or provides false and false information about the correct pre-existing disease, age, income and occupation as well as the insurance policy. In such cases, the insurer has the right to refuse the claim occurring after the death of the insured on the grounds that the insured did not disclose any material facts at the time of the conclusion of the contract. .