Remedies for Breach of the Pre-contract Duty of Disclosure in Chinese Insurance Law

Chinese Insurance Law imposes on the insured a duty to disclose material information prior to the conclusion of the contract. The duty is limited to the scope and extent of the insurer’s inquiry and to the insured’s actual knowledge. The insurer may rescind the contract if the insured failed to comply with the duty intentionally or by gross negligence and the undisclosed fact is material. This article considers the remedies for breach of the duty, examines the way in which courts determine whether a breach is intentional or by gross negligence, discusses deficiencies of the remedies, and recommends adopting the doctrine of proportionality for insurer’s liability for losses.