The Taichung branch of the Taiwan High Court rendered the 106-Bao-Xian-Shang-Yi-1 Civil Decision of March 21, 2017 (hereinafter, the “Decision”), holding that the notice for overdue premium under an insurance contract should be delivered to the most recent domicile or residence of the proposer to become effective, and the burden of proof should be assumed by the insurance company.
According to the facts underlying this Decision, Individual A’s husband obtained whole life cancer pay insurance from Insurer B (hereinafter, the “Insurance Contract at Issue”). Individual A’s husband subsequently died of cancer. Individual A claimed insurance from Insurer B pursuant to the Insurance Contract at Issue. However, Insurer B stated that because Individual A’s husband had only paid the first installment of the premiums under the Insurance Contract at Issue without any further payment and the premiums remained unpaid upon 30 days after Insurer B served a notice demanding payment, the validity of the Insurance Contract at Issue was suspended, and the Insurance Contract at Issue was not reinstated over 2 years since then, so it was expired.
According to the Decision, Article 116 of the Insurance Law provides that a notice of payment due shall be delivered to the most recent domicile or residence of the proposer. The legislative objective is to eliminate disputes arising from manners of notification to protect the insured or proposer. In addition, the legal effect of failure to deliver insurance premiums under the Insurance Law is different from that under the Civil Code. Therefore, to balance the substantive power of the insurer and the proposer when such insurance relationship is changed, it is certainly necessary to require an insurer to first substantiate that the notice for overdue premium has been delivered to the proposer before asserting the effect of the proposer’s failure to pay insurance premiums.
It was further held in the Decision that although Insurer B contended that relevant information, the registered mail containing the notice for overdue premiums, and the return receipt of the registered mail with respect to the Insurance Contract at Issue exceeded their retention period and thus could not be provided, still Insurer B, as a juristic person that runs a business, was more capable of assuming the burden of proof than an ordinary natural person like Individual A and, therefore, should assume the burden of proof to substantiate such notification. However, Insurer B only produced the original payment statement for the Insurance Contract at Issue without producing relevant documentation such as registered mail demanding the payment of overdue premiums or any return receipt. Therefore, it was certainly difficult to prove that Insurer B’s notice for overdue payment was lawfully delivered to Individual A’s husband and to conclude that the subsequent effect of suspension and invalidation took place. Hence, the Insurance Contract at Issue was still in force, and Insurer B should pay insurance to Individual A pursuant to the Insurance Contract at Issue after the insured event causing the death of Individual A’s husband took place. Therefore, the Decision was rendered in favor of Individual A.