The Taiwan High Court rendered the 108-Bao-Xian-Shang-3 Decision on August 21, 2019 (the “Decision”), in which it held that even if a party purchased insurance under the name of the insured, under the corresponding obligation principle, the contract does not actually bind the insurance company, and the party has no basis to request as an applicant to terminate the contract.
The appellant used the appellee’s name to purchase insurance (“Insurance Policy”) from the appellee insurance company in 2010 for investment purposes. The appellant asserted that since he had terminated the borrowed name agreement with the appellee, which was previously confirmed in a final court decision, and then sent a notice to the appellee insurance company pursuant to Article 9, Paragraph 1 of the Insurance Policy, which provides that “the applicant may terminate this Contract at any time,” the appellee insurance company must remit the termination payment as stipulated.
The Decision first started by saying that investment insurance refers to the a type of personal insurance under Article 123, Paragraph 2 and Article 146, Paragraph 5 of the Insurance Law, in which the insurer makes stipulated deductions of insurer fees from the insurance premium paid by the applicant and deposits them in a special account pursuant to the agreed or designated investment allocation method, and the applicant shall assume all or part of the investment risks. This requirement is also specifically provided for under Article 14 of the Enforcement Rules of the Insurance Law. In this case, although the appellee argues that the borrowed name relationship has been confirmed in the a separate court decision, that decision based its conclusion on how the Insurance Policy has both insurance and investment functions and that the appellant had actually paid the insurance premiums, while in contrast, the appellee insurance company showed that the Insurance Policy was life insurance rather than investment insurance, and it primarily covered death, funeral, total disability and maturity benefits without any investment allocation, thus it is not an investment-linked policy defined under Article 14 of the Enforcement Rules of the Insurance Law, and the appellant had also stated that he does not contest the above facts. Since the facts presented in this litigation are different from the facts relied on by the other court in its conclusion, this court is not bound by any issue preclusion effect from the former case.
It was further pointed out in this Decision that even if the appellant had obtained the Insurance Policy by borrowing the appellee’s name, such contract involving a borrowed name is not binding to the appellee insurance company according to the corresponding obligation principle. Therefore, as far as the Insurance Policy is concerned, since the appellee was the applicant, the appellant was never the actual applicant and thus has no basis to request the termination of the contract. In addition, Article 9, Paragraph 3 of the Insurance Policy specifically provides that the appellee insurance company is obligated to remit the termination payment only when the insurance contract is terminated. Since the appellee as the actual applicant has not terminated the Insurance Policy, the contract is still ongoing, and appellee cannot receive the termination payment from the appellee insurance company. As a result, the appellant’s argument that he had the right to claim the termination payment from the appellee insurance company since the Insurance Policy has had been lawfully terminated is groundless.