Recently, the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Insurance Law of the People’s Republic of China (III) (hereinafter referred to as “the 3rd Judicial Interpretation of Insurance Law” or the “Draft”) has promulgated to solicit advice from public. The Draft regulates in detail several commonly occurring issues in judicial practice with respect to life insurance contract, which would be helpful to adjudicate disputes in this regard and have important significance on protecting the parties’ legitimate rights and interests.
The Insurance Law has been amended twice since being enacted in 1995. In 2002, in order to fulfil our country’s commitment for joining the World Trade Organization, the standing committee of the National People’s Congress revised part of the Insurance Law. In 2009, the standing committee of the National People’s Congress revised the Insurance Law again, and significantly altered the provisions relating to insurance industry and insurance contract, especially the part of insurance contract.
After the amendment in 2009, the Supreme People’s Court promulgated the 1st Judicial Interpretation of Insurance Law in time, which solved the problem of application and cohesion of the new law and the old law. Then, in 2013, the Supreme People’s Court issued the 2nd Judicial Interpretation of Insurance Law to interpret the general provisions in the chapter of insurance contract, which solved the problem of law application with respect to general provisions in the chapter of insurance contract.
Nevertheless, compared to the insurance laws of some foreign countries, the current Insurance Law of PRC seems relatively sketchy, which has many over-broad or principled provisions, and lacks detailed or specified provisions. As a result, the judges have more discretion in adjudicating cases. In recent years, the internal structure and external environment have changed greatly, and new conditions and new issues have occurred more and more. Thus, some provisions of the current Insurance Law could not satisfy the development of insurance industry.
In addition, the insurance industry is regarded as an exotic industry in our country, and the corresponding judicial practice is not very abundant. Overall, due to the lack of experience, the judicial interpretation provides a necessary guidance for the application of Insurance Law by court, the operation of insurance industry and the activities of consumers.
The 3rd Judicial Interpretation of Insurance Law and the upcoming 4th Judicial Interpretation of Insurance Law respectively interpret certain provisions regarding life insurance contract and property insurance contract in the chapter of insurance contract, the purpose of which is to solve the problem of law application in judicial practice, to satisfy the needs of commercial trial and respond the demands of market.
This Draft has 10 chapters, 46 articles in total, including insurable interest of life insurance, duty of honest disclosure, insurance taking death as a condition for payment of insurance benefits, premium and suspension and reinstatement of insurance contract, beneficiary and beneficial interest, policy and rescission of insurance contract, medical expense and accident insurance, group life insurance, special insurance clauses and others.
In the Draft, five articles have “the other opinion”, which are article 4 “the insured’s ex post disagreement”, article 10 “rescission and revocation”, article 32 “subrogation under medical expense insurance”, article 33 “double application of compensational medical expense insurance”, article 36 “the standard of injury or disability”. It is said that since there are still some controversies on these articles, “the other opinion” is proffered to solicit advice.
Other than this, regarding the other articles in the Draft, there are also some doubts in the industry. For example, with respect to article 1 “the forms of insured’s consent”, relevant people said the purpose of this article is to facilitate the validity of the insurance contract, however, this might cause insufficient protection of insured’s life safety, and the insurer shall bear duty of care in a higher level; with respect to article 35 “medicare standard”, relevant people said currently there is no medicare clause in compensational medical insurance, and the insurers independently determine the related content by referring to the medicare policies, thus the application of this article might be very limited.
With the development of insurance industry in our country, the new amendment of the Insurance Law is to be vividly portrayed. It is said that the next amendment would focus on the part of insurance industry and alter the provisions of insurance industry, while there would be no amendment with respect to the part of insurance contract. By this token, the judicial interpretation would have significant meaning on the part of insurance contract of the Insurance Law. We have reason to believe that the 3rd Judicial Interpretation of Insurance Law will play an important role in the future judicial practice.