Ankwei Chen
On September 29, 2020, the Supreme Court rendered the 108-Tai-Shang-2362 Decision of September 29, 2020 (the “Decision”), in which it held that an insured can still enter into a health insurance contract while sick or pregnant, and while the insurer is not liable for such pre-existing conditions, it is still liable to pay for illness that occurs during the period of coverage.
The Appellant and spouse A separately entered into insurance contracts) with insurance company C, which is the predecessor of Appellee insurance company B, as well as Appellees Insurance Company D and Insurance Company E. Each insurance contract specifically provides that if the Appellant’s speech function is permanently lost, the Appellees shall pay the insurance compensation. Appellant later developed a malignant tumor on the left tongue and underwent surgery, which resulted in a permanent loss of speech function as verified by an ENT specialist. The Appellant submitted the relevant diagnosis documents and medical records to the Appellees to claim disability insurance compensation, but the Appellees refused to pay on grounds that Appellant concealed his illnesses at the time of the insurance contracts, which rendered them invalid. The Appellant filed a complaint to seek relief that compels the Appellees B, D and E to pay insurance compensation to Appellant.
According to the Decision, Article 51, Paragraph 1 of the Insurance Act provides that if the insured risk has taken place or is extinguished at the time the insurance contract is executed, the contract shall be invalid unless the parties are unaware of such fact. In addition, under Articles 127 of the Insurance Act the insurer is not liable to pay for illness or childbirth if the insured was sick or pregnant at the time the insurance contract is executed, the insurer shall not be liable for paying insurance benefits for such illness or childbirth. The legislative reasoning for the provision further shows that the insured can execute a health insurance contract even while ill or pregnant without causing such contract to be invalid; however, the insurer is not liable for such pre-existing conditions but remains liable to pay for illnesses contracted during the period of coverage. This is distinguishable from the invalidation of insurance contracts under Article 51.
The Decision further points out that under the insurance contracts at issue, if the Appellant suffers from “permanent loss of the ability to chew or speak,” the Appellees shall pay disability insurance compensation to the Appellant. Since the Appellant is also claiming insurance compensation for incapacity caused by illness, the above stipulation of compensation on incapacity is a form of health insurance. The lower court is thus obliged to examine whether Article 127 of the Insurance Act should be applied first with respect to those illnesses under the insurance contracts without skipping directly to invalidate those contracts under Article 51. Therefore, the lower court’s fact finding and application of law thus appear to be questionable.