Disclosure in insurance law: a comparative analysis

Disclosure or non-disclosure is one of the key issues in insurance contract. This paper compares laws on remedy for no-disclosures in European and other major jurisdictions. It concludes there are generally two different approaches on remedy for non-disclosure—(1) the strict disproportionate approach; and (2) the proportionate approach. The paper introduces an asymmetric information model to elaborate on the ongoing debates over the various normative issues of fairness with respect to the two different approaches. It confirms that the proportionate approach serves better the goal of fairness, in particular for the insured who acts honestly but carelessly provides bad information to the insurer. The model provides a statistical tool for a correct range of remedy on non-disclosure.