Accordingly, when an insured event occurs, the insurance company's responsibility to pay the insurance money only arises on the basis of reviewing and comparing the content of the above 3 types of clauses, and must satisfy two conditions: the loss must be within the scope of insurance, and the loss must not be "excluded from insurance liability".
In the current practice of compensation settlement and insurance payment: If the loss occurs due to risks not covered by insurance, there is no legal basis for considering and settling compensation. This means that this loss does not give rise to insurance liability at all; As for the case of loss occurring within the scope of insured risks (insurance event occurs), but if the insurance buyer violates the "exclusion of insurance liability" regulations, insurance companies, depending on each case, can completely exclude 100% of insurance liability, or apply a certain level of sanctions, which can be 50% or even 80% of insurance liability.
However, insurance business practice shows that in the content of current insurance rules, there is no clear distinction between the provisions on "risks not covered by insurance" and the clause stipulating "cases of exclusion of insurance liability", but even combines these two clauses into one, thus making the content of the clause very complicated and difficult to understand. This is partly due to a lack of understanding of the nature and function of these clauses in the contract, so there is a lack of caution in the process of building insurance clause rules, as well as the use of words when stipulating this issue. As a result, the refusal to compensate when applying the clause of exclusion of insurance liability often leads to disputes, and when brought to trial, it is often disadvantageous to the insurance company.
Please cite a specific example of an insurance contract dispute that shows
What is the cause of the dispute and why must we understand and apply the contents of this Clause correctly? That is the case of the dispute related to the refusal to settle compensation by Bao Viet Kien Giang for the accident of fishing boat KG 8334 TS of Mr. Quach Kim Thong that occurred on January 14, 2000 and sank due to flooding .
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- According to the Insurance Rules for Fishing Vessel Hulls Operating in Vietnam's Inland Waters and Seas (issued in 1997), the risk of sinking and water damage is a risk.
insured according to the provisions of Article 3.b of the Insurance Rules, however, the accident of this fishing boat occurred in the case of " The captain and chief engineer did not have a driving license as prescribed ", this is a case of exclusion of insurance liability according to the provisions of Article 6.6 of the Insurance Rules, therefore, Bao Viet Kien Giang applied this provision and refused to compensate.
- However, when the case was brought to the Kien Giang Provincial Court for appeal, Judgment No. 137/DSPT dated September 10, 2002 rejected Bao Viet Kien Giang's decision to refuse compensation, and forced the company to compensate for damage to the ship's hull to the Ship Owner, arguing that " the risk of the ship being waterlogged and sinking at sea was an objective event, not due to Mr. Thong's fault for having an invalid driving license, and the damage was not caused by Mr. Thong's intentional fault". Currently, the case
is being reviewed under the Chief Justice procedure, because Bao Viet Kien Giang believes that the content of the Court's judgment is not based on the content of the Insurance Contract.
signed between the parties. So, why can the same contract content have two different understandings and applications?
In fact, Article 6.6 of Bao Viet's 1997 fishing boat insurance rules stipulates cases of " exclusion of insurance liability ", losses occurring when " the Captain and chief engineer do not have a driving license as prescribed". That is the exclusion clause of insurance liability as prescribed in Article 16 of the Law on Insurance Business presented above. Regarding the contents of the insurance contract, the refusal to compensate for this case is correct. However, Bao Viet Kien Giang still lost due to the complexity of the regulations.
This provision, as well as the Court's lack of understanding of the ethics and principles of the provisions in the Insurance Contract. This fact also shows that the Insurance Company has not focused on clearly and easily stipulating this issue in the Insurance Rules, even specifically Article 6 of the Fishing Boat Insurance Rules has included both the excluded risks and the excluded cases in the content of one article, so it has suffered disadvantages.
In addition, regarding the provision in Clause 3, Article 16 of the Law on Insurance Business on the non-application of the provision "exclusion of insurance liability" in the case where the Insurance Buyer "unintentionally violates the law", we believe that this provision needs to be clarified as to what constitutes unintentional violation of the law, because in business practice
Insurance shows that this provision is easy to cause disputes between parties and is easy to be violated by people.
insured to invalidate insurance exclusions.
According to the above-cited contents, the "exclusion of insurance liability" clause in the insurance rules is applied to insurance events that occur in cases where the Insured commits illegal acts such as: vehicles not qualified to operate; ships not qualified to sail; vehicles entering prohibited roads; vehicles traveling at night without lights; drivers or train drivers without a license; vehicles carrying overloaded loads... Normally, these are acts prohibited by law, regardless of whether they are intentional or unintentional, they are considered serious violations. Therefore, these cases of law violations, when stipulated in the Insurance Contract, are expressed as agreed terms, with implicit effect - automatically applied to exclude insurance liability when the Insured commits a violation, without having to prove intentional or unintentional fault .
Therefore, the provisions in Clause 3.a, Article 16 of the Law on Insurance Business need to be specifically guided so that the application and enforcement of the law is consistent, avoiding disputes and invalidating the provisions excluding insurance liability when the insured commits acts that violate the law.
3.2.6. Insurance companies' obligation to provide information and explain contracts when concluding contracts
According to the provisions of Clause 2.a, Article 17 and Article 19 of the Law on Insurance Business, when concluding an insurance contract, the insurance company must provide the insurance buyer with information related to the insurance contract, explain the conditions,
insurance terms and legal consequences in case the insurance company fails to perform these obligations (The insurance buyer has the right to unilaterally suspend the performance of the contract; the insurance company must compensate the insurance buyer for damages arising from providing false information). However, when applying these provisions in practice, it is necessary to have clearer instructions explaining:
+ In what cases is an insurance company considered to have intentionally provided false information in order to enter into a contract?
+ What is this information?
Insurance contracts, with the nature of bilateral contracts, the obligation to explain of the insurance company corresponds to the right to request explanation of the insurance buyer (stipulated in Clause 1a, Article 18 of the Law on Insurance Business), is understood to be performed at the request of the insurance buyer , so, in case the insurance buyer does not request , does the insurance company have to explain or not ?
In fact, the contents of the Insurance Contract are available, public, and the insurance company cannot conceal this content. Rules,
Insurance terms of insurance companies are strictly managed by the Ministry of Finance through the reporting and registration of applicable Insurance Rules by insurance companies (Article 5 and Article 18 of Decree 42CP implementing the Law on Insurance Business). Thus, the Insurance Buyer can completely refer to the entire content of the contract before signing, in case of not understanding and needing explanation, at that time (reasonably) must request the insurance company to explain; and if there is no request for explanation, it is considered that the Insurance Buyer has understood and accepted the entire content of the Insurance Contract.
In practice, disputes often arise because the insured party often
giving reasons for not understanding or not being explained about the content of the insurance contract to avoid obligations, reacting to the settlement of the insurance company. Therefore, to avoid future disputes related to the implementation of agreements in the insurance contract, the issue of "obligation to explain the insurance contract" of the insurance company in the Law on Insurance Business needs guidance and regulations.
Specify ( or allow the parties to agree ) the specific time or period for the parties to exercise their respective rights and obligations; if the parties fail to exercise their respective rights and obligations within that time, it is considered that there is no dispute on this issue. This provision is very necessary to protect the interests of the insurance company, avoiding the case where the insurance buyer takes advantage of this provision to avoid obligations that the insurance company cannot prove otherwise.
3.2.7. Regulations on duplicate insurance contracts in Article 44 of the Law on Insurance Business.
The regulation on double insurance is a basic legal feature, applied to property insurance contracts. Regarding the technical principles of insurance business, the regulation
The principle of double insurance is based on the principle of accepting insurance not exceeding the value of the insured property, preventing the insurance buyer from taking advantage of the insurance by entering into multiple insurance contracts, with the insurance amount exceeding the insured value of the insured property.
The Law on Insurance Business has provided regulations on duplicate insurance in Article 44, however, this regulation has not shown the typical signs of duplicate insurance, compared to the case of "co-insurance". Specifically:
- According to the provisions of Article 44 of the Law on Insurance Business, the definition of a duplicate insurance contract is as follows: "1. A duplicate insurance contract is a case where the insurance buyer enters into an insurance contract with two or more insurance companies to insure the same subject, with the same conditions and insurance events ;
Reviewing this provision shows that: Duplicate insurance contracts are defined in a way that clearly indicates the scope of the concept, including the following signs : entering into insurance contracts with two or more insurance companies; insuring the same
object; with the same insurance conditions and insurance events . Thus, duplicate insurance according to this regulation can be understood as only needing to participate in insurance at many insurance companies, with the same conditions, the same insurance object, the same insurance event, and not being required to participate in insurance above value , with the same insurance benefits , so it can be insurance at the right value or insurance below value .
According to the French Republic's point of view, in the case of multiple contracts
signed with different organizations that can insure the same risk, it is also called co-insurance , but from the time that these Insurance Contracts
signed on the same benefit, these contracts can become duplicate insurance [28; p. 23]. In fact, the case where the total insurance amount from the contracts can exceed the insurance value only occurs when these contracts insure " the same insurance benefit " or the same part of the insurance benefit , leading to the overlap of the insured benefit, easily leading to the risk of insurance fraud because it is possible to receive compensation more than once on the same insurance benefit. This is the basic feature to distinguish " duplicate insurance " from the " co-insurance " relationship. In the "co-insurance" relationship, the Insurance Contracts coexist
to share the risk and insure each part of the insurance benefit, the total amount of insurance
Insurance from contracts never exceeds the actual value of the insured property, because there is no duplication of insured interests.
Although the regulations on duplicate insurance may vary from country to country, in general, all countries agree on the characteristic signs of duplicate insurance, which are multiple insurance contracts that cover the same insurance benefit . Referring to the regulations of some countries on duplicate insurance allows us to clarify this issue:
+ French Republic: French Insurance Law in Article L 124-4 (excerpt) " Duplicate insurance: A person insured by multiple insurers under multiple contracts for the same benefit for the same risk, must immediately provide information to the other insurers. In that case, the insurer must notify the name of the insurer with whom another contract has been signed and specify the amount of insurance" [28, page 19].
+ Philippines: Philippine Insurance Law Article 93 stipulates that " a double insurance exists when the same person is insured by different insurers for the same object and same benefits " [23, p. 121].
+ China: Chinese Insurance Law, Article 40 stipulates " ...Duplicate insurance is when the insurance applicant signs an insurance contract with two or more insurers on the same insurance object, the same insurable interest and the same insurance event "[18].
Thus, the sign of multiple Insurance Contracts for " the same benefit " is
The characteristic sign of duplicate insurance was not noted in the content.
Article 44 of the Law on Insurance Business. Therefore, the basic legal characteristics between "double insurance" and "co-insurance" have not been distinguished.
Recommendation : The definition of duplicate insurance according to Article 44 of the Law on Insurance Business needs to be studied and revised to be consistent with the technical principles of insurance.
3.2.8. Regulations on the legal subrogation rights of Insurance Companies.
In property insurance, when the insured risk occurs due to the fault of a third party causing damage to the insured property, the Insurance Company, after settling the compensation according to the Insurance Contract, is allowed to subrogate the rights.
The insured person proceeds to pursue the third party causing the damage to claim compensation for the amount that the business has settled.
According to the provisions of Article 49 of the Law on Insurance Business, "1. In case a third party is at fault for causing damage to the insured and the insurance company has paid compensation to the insured, the insured must transfer the right to request the third party to reimburse the amount of compensation he has received to the insurance company ". And Clause 2, Article 49 of the Law on Insurance Business allows the insurance company to deduct the compensation amount in cases where " the insured refuses to transfer the right; does not reserve or waive the right to claim the third party causing the damage. Thus, according to this provision, the legal subrogation of the insurance company to claim the third party causing the damage can only be exercised after the insurance company has paid the compensation , and the right to deduct the compensation amount of the insurance company only arises and is exercised when the compensation has been paid in full.
So, the question is whether the Law allows the Insurance Company to deduct the entire compensation amount? Is it reasonable when the Law stipulates that the right to deduct compensation of the Insurance Company is only issued after the full compensation is paid, while in reality, the Insurance Company can only effectively exercise this right of deduction when the Insurance Company has not paid the compensation? In addition, how are the rights of the Insurance Company guaranteed if after the compensation has been transferred, the insured refuses to transfer the right; does not reserve or waive the right to claim damages from a third party ?
To solve these problems, it is necessary to review the regulations in the Law on Insurance Business. Specifically: Is it reasonable to transfer the right to claim compensation from a third party of the insured to the insurance company before paying compensation or after paying compensation?
- Regarding this issue, we find that: Although, according to the provisions of the Law on Insurance Business, the transfer of the insured's right to claim a third party can only be done on the basis of (and after) the Insurance Company has paid compensation, in reality, this issue must be determined and ensured.
done before the insurance company transfers the compensation money . Only then will
sufficient legal basis for the Insurance Company to pay compensation, as well as being able to
apply sanctions (deduction of compensation) in case of
The insured fails to perform this obligation.
- In fact, when considering Clause 2, Article 49 of the Law on Insurance Business, the right to deduct compensation of the Insurance Company is applied in the case where the insured person " refuses to transfer the right to claim to the Insurance Company, does not reserve or waive the right to claim compensation from a third party " depending on the level of fault of the insured person. However, 100% of the compensation amount can be deducted.
Is it possible, then this provision is unclear and very difficult to apply in that: The violation of the insured according to the wording of this provision is absolute. Because from the time the insured gives up all rights to request the third party to compensate for damages, according to the provisions of Clause 3, Article 380 of the Civil Code, the third party causing the damage is understood as the party with the obligation to be considered to have terminated the obligation to compensate when "the party has the right to waive the obligation". Thus, in this case, the legal subrogation right of the Insurance Company is completely not allowed.
ensure that the Insurance Company has no right to pursue the third party causing the damage to reimburse the amount of compensation that the Company has settled (the Law on Insurance Business stipulates that the right of recourse of the Insurance Company only arises on the basis of a transfer of a claim for compensation from the insured ). Therefore, in principle, the Insurance Company has completely lost the right to pursue the third party, therefore, in a fair and reasonable manner, the Insurance Company must have the right to deduct 100% of the compensation amount, and to be legally effective, this issue must be clearly regulated in the Law on Insurance Business.
- Regarding the issue of how the insurance company's interests are guaranteed if after the insurance company has paid the compensation, the insured person violates the obligation to transfer the right to claim? Can the insurance company reclaim the amount paid, or deduct the compensation? In fact, the insurance company can only effectively exercise the right to deduct compensation if the insurance company has not paid the compensation. In case the compensation has been paid, the insurance company is at a complete disadvantage, they can only reclaim the amount of compensation by pursuing the procedure.