Utmost good faith and incontestability

The principle of utmost good faith in insurance applies in both directions. The insurer expects the consumer to declare truthfully what he knows or ought to know about the nature of the risk. The consumer expects the insurer to declare truthfully the nature of the insurance contract and also to settle the claim fairly, as was promised.

It would be wrong for the insurer to find unjustified grounds to reject the claim. As it is difficult to monitor the bad behavior of insurers, some countries have introduced the incontestability clause to govern life and health insurance policies. This is to prevent the insurer from finding flimsy excuse to reject claims due to alleged non-disclosure, especially if the consumer does not even know about the condition that they failed to disclose.

I hope that insurers and regulators understand the need for fair treatment of consumers and the correct application of the principles of utmost good faith and the incontestability clause. If consumers are unfairly treated, they will lose trust in insurance contracts.

Tan Kin Lian