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A Study on Changes in the Law of the Utmost Good Faith in the UK with Overseas Trends and Focusing on the Expansion of Insurers' Duty

  • Legal Theory & Practice Review
  • Abbr : LTPR
  • 2025, 13(1), pp.379~405
  • Publisher : The Korea Society for Legal Theory and Practice Inc.
  • Research Area : Social Science > Law
  • Received : February 9, 2025
  • Accepted : February 20, 2025
  • Published : February 28, 2025

Hwang JungHye 1

1한국해양대학교

Accredited

ABSTRACT

The duty of utmost good faith is an obligation under the English Marine Insurance Act that emphasizes that the obligations required of the parties to an insurance contract should be performed with the utmost good faith, and is currently the guiding principle of all insurance contracts. The duty of utmost good faith has a significant impact on the contract itself before the contract is concluded, while after the contract, it causes damage to the other party or causes the contract to become invalid, thereby causing disadvantages to the other party. However, despite the premise of an equal relationship in the rights and obligations of the contracting parties, in reality, it is advantageous to the insurer and relatively disadvantageous to the insurance consumer. As a result of criticism, the relevant legal provisions have been revised and amended, and the duty of utmost good faith has been relatively relaxed for the insurance consumer, while the duty has been strengthened and the scope of the duty has been expanded for the insurer. The punitive damages liability under the US insurance law and the expanded interpretation of the duty of the insurer under the Australian Insurance Contracts Act can be said to reflect this trend of strengthening and expanding the duty of the insurer. Our Supreme Court also ruled that “the duty of utmost good faith under the English Marine Insurance Act applies to all stages of the conclusion, performance, and claim of insurance money after an accident,” and thus the duty of utmost good faith is recognized not only before but also after the conclusion of an insurance contract. However, when we examine the legal provisions in our Commercial Act that indirectly include the duty of utmost good faith with respect to the person liable for the duty of utmost good faith, most of them are measures to prevent or restrain the moral risk of the policyholder, and the legal provisions that require the insurer to fulfill the duty of utmost good faith are relatively few, and it is difficult to judge that the effect of the breach of duty by the insurance consumer and the insurer is equal. Rather than providing provisions to protect the insurance consumer, who is relatively weaker in insurance contracts, the insurance section of Part 4 of the Commercial Act stipulates more various mandatory provisions than the insurer, which is not in line with the purpose of protecting the insurance consumer, who is relatively less specialized, and rather seems to give more power to the insurer. This situation should also be considered in light of the fact that insurance complaints are continuously increasing despite multifaceted efforts. In order to protect the relatively weak insurance consumers and achieve a practical balance in insurance contracts, it is necessary to expand the insurer's obligations and strengthen the performance of the obligations, rather than emphasizing the fulfillment of the utmost good faith obligation only to the insurance consumers. In this study, the concept of the utmost good faith obligation and the difference from the duty of good faith in insurance contracts were studied, and the necessity of expanding the utmost good faith obligation of the insurer and improvement measures for strengthening it were presented as domestic implications through analysis of the legal changes in England, the origin of the utmost good faith obligation, and overseas trends. The results of the study are as follows. The results of the study on improvement measures necessary for expanding the utmost good faith obligation of the insurer are as follows. First, it is necessary to delete the cancellation right provision in case of violation of the duty to explain insurance terms and conditions before concluding the contract, and to revise the starting point of exercising the contract holder's rights from the time of concluding the contract to the time of learning of the violation. Second, additional provisions are needed for the insurance payment obligation after concluding the insurance contract, regarding the insurance payment investigation and calculation period, and this period should be predictable so that the reasonable protection expectations of the insurance contract holder can be met. Third, in order to strengthen the independent and objective supervisory function of the supervisory agency, the supervisory function should be separated and the establishment of an independent agency should be promoted. By expanding the authority of the supervisory agency, it will be possible to expect a practical insurance consumer protection function through supervision of insurers.

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