The applicant of a personal insurance should have the right to independently decide if the right to terminate the insurance contract is to be exercised, and the enforcement court shall not terminate the contract on behalf of the applicant and has no right to order the insurance company to terminate the contract, either (Taiwan)

Debby Yu

The Taiwan High Court rendered the 108-Bao-Xian-Shang-Yi-Zi 13 Decision of November 20, 2019 (hereinafter, the “Decision”), holding that the applicant of a personal insurance should have the right to independently decide if the right to terminate the insurance contract is to be exercised, and the enforcement court shall not terminate the contract on behalf of the applicant and has no right to order the insurance company to terminate the contract, either.

According to the facts underlying this Decision, Individual A, who is not a party to this lawsuit, owed the Appellant a fine.  Learning about the existence of an insurance contract between Individual A and the Appellee, the Administrative Enforcement Agency prohibited, via an order for attachment, Individual A from engaging in any collection or any other disposal concerning the insurance benefits, the claim over the surrender value and the claim over the existing policy value reserve due from the Appellee, and the Appellee from repaying Individual A.  The Administrative Enforcement Agency further indicated, via a charging order, to the Appellee that the insurance contract should be terminated and allowed the Appellant to collect the surrender value from the Appellee.  The Appellee stated its objection to the Administrative Enforcement Agency.  However, the Appellant believed that Individual A lost the disposal right over his right under the insurance contract as soon as the order for attachment became effective.  In addition, the right to terminate an insurance contract is not exclusive, and the Administrative Enforcement may, out of the need for value exchange, exercise the right to terminate the insurance contract in Individual A’s position and change the policy value reserve into a specific claim over the surrender value in accordance with Article 26, to which Article 115, Paragraph 2 applies mutatis mutandis, of the Compulsory Enforcement Law.  Once the insurance contract was terminated, the Appellee should hand over the surrender value to the Appellant.  Therefore, the Appellant requested payment from the Appellee in accordance with Article 26, to which Article 115, Paragraph 2 applies mutatis mutandis, of the Compulsory Enforcement Law, the charging right granted by the charging order and Article 119, Paragraph 1 of the Insurance Law.

According to the Decision and practical opinions, the right of subrogation does not apply to life insurance and accident insurance, which are part of personal insurance, due to the pricelessness of human lives and the exclusivity of legal benefits such as life and health.  In addition, a life insurance contract exists not only for the benefit of the applicant but also involves the interest of the insurer, the insured and the applicant.  If a third party may terminate an insurance contract at will, the interest of multiple parties may be seriously undermined.  In addition, the subject matter of life insurance is the pricelessness of human lives.  Therefore, its value cannot be valuated based on economic benefits, and this not a simple economic claim relationship.  If the personal insurance of another person may be changed at will due to a claim relationship, it is tantamount to viewing that the claim relationship is more valuable than the value of a human life, and it would be inappropriate to allow the contractual relationship exclusive to human lives to be changed due to a claim relationship.  Therefore, the applicant of a personal insurance should have the right to independently decide if the right to terminate the insurance contract is to be exercised, and the enforcement court has no right to terminate the contract on behalf of the applicant or to order the insurer or insurance company to terminate the contract.

It was further pointed out that the enforcement court has no right to elect to terminate an insurance contract on behalf of the applicant or to order the insurer to terminate the insurance contract.  The Appellant’s assertion that out of the need for value exchange, the Administrative Enforcement Agency may terminate the insurance contract at issue in accordance with Article 26, to which Article 115, Paragraph 2 applies mutatis mutandis, of the Compulsory Enforcement Law is certainly unacceptable.