TAIWAN Law and Practice Contributed by: Daniel T H Tsai, Lee and Li
6.4 Legal Requirements and Distinguishing Features of an Insurance Contract In general, the insurer provides the written enquiries to the insured or the proposer and an insurance contract is drawn up in the form of a policy or a binder (based on Article 43 of the Insurance Act). The insurance contract is normally in writing and includes the par- ties, insurance interest, insurance incidents, insurance period, insurance amount and insurance premium. However, based on past court practice, courts in Tai- wan do not necessarily consider the contents of an insurance contract to be limited to written documents, as long as there is proof of mutual consent to the contents. Nonetheless, it is worth noting that a life insurance contract entered into by a third party with- out written consent from the insured and stipulation of the insured amount will be considered void (based on Article 105 of the Insurance Act). Furthermore, in the reinsurance contract, the FSC has promulgated the Regulations Governing Insur- ance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms and set out additional criteria (eg, applicable law and court of jurisdiction). The proposer and the insured must have the insurance interest, otherwise the insurance contract will lose its validity as per Article 17 of the Insurance Act. 6.5 Multiple Insured or Potential Beneficiaries Generally speaking, there are no explicit regulations concerning the eligibility of insurance beneficiaries in Taiwan. This will depend on mutual consent from the insurance contract parties and verification by the court. As mentioned in 6.4 Legal Requirements and Distin- guishing Features of an Insurance Contract , courts in Taiwan may determine the contents of the insur- ance contract based on evidence other than the writ- ten contract itself. Therefore, it is possible to let the beneficiaries of the insurance contract include ten- ants, subcontractors and mortgagors, as long as it is possible to confirm and verify the mutual consent of the parties on such content (as well as the insurable interest) before the court.
Normally, the court will investigate the correspond- ence between parties and question the witness (or even the expert witness). It is difficult to say what the rules are regarding the identification of beneficiaries in the contract, as this really depends on the judge in each case. If the beneficiaries of the insurance contract include someone other than the named insured in the written contract, the court will likely take into consideration: • whether it was ever implied that such beneficiaries were included in the insurance contract during the contract negotiation; and • whether such failure to disclose the unnamed insured is enough to alter or diminish the insurer’s estimation of the risk to be undertaken, thereby justifying the partial or whole annulment of the insurance contract. 6.6 Consumer Contracts or Reinsurance Contracts There are no exact guidelines concerning the differ- ence between consumer insurance contracts and commercial insurance contracts in Taiwan. Given that the Taiwan courts are usually pro-consumer, however, it is possible that the court may make room to include unnamed beneficiaries within the scope of coverage if the insured is a consumer rather than a commercial entity. Given that the insured in a reinsurance contract is also the insurance entity, the court tends to place more emphasis on the written documents and correspond- ence, as both parties are experts in the insurance business and shall be prudent with regard to the writ- ten information. Alternatively, the court may engage an independent surveyor to help reach a decision on including unnamed beneficiaries within the scope of coverage because both parties are experts and will therefore usually respect the opinion provided by an independent third-party expert.
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