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Ethical Behavior & Success as an Insurer

See the full video here https://youtu.be/CeUtfqL4NI0

The first recognized statement of the covenant of good faith and fair  dealing was issued by Lord Mansfield in the British House of Lords in  1766 in Carter v. Boehm S.C. 1 Bl.593, 3 Burr 1906, 11th May  1766 provided that the reason for the rule \\u201cobliges parties to disclose  is to prevent fraud, and to encourage good faith. It is adapted to such  facts as vary the nature of the contract; which one privately knows, and  the other is ignorant of, and has no reason to suspect.\\u201d Lord Mansfield  was faced with a need to determine whether there was, under all the  circumstances at the time the policy was underwritten, a fair  representation; or a concealment; fraudulent, if designed; or, though  not designed, varying materially the object of the policy, and changing  the risks understood to be run.

Lord Mansfield found that an ethical underwriter with knowledge of  the risks being taken equal to or better than that of the person  insured, could not, in good faith, claim that material facts were  concealed from him because utmost good faith required the underwriter to  use his superior knowledge to favor the insured.

In Whitcomb v. Whiting, 2 Doug. 652, also decided by Lord Mansfield, several years after the decision in Carter v. Boehm,  held that an admission by one joint debtor was the admission of all,  and that \\u201cthe law raises a promise to pay when the debt is admitted to  be due.\\u201d

It is no answer for a person insured to say that the error or  suppression of a material fact was the result of mistake, accident,  forgetfulness or inadvertence. It is enough that the insurer has been  misled, and has thus been induced to enter into a contract which, if it  had received correct and full information, the insurer would either have  declined, or would have accepted insurance upon different terms. Even  if no fraud was intended by the person insured it is nevertheless a  fraud upon the underwriter, and makes the policy voids.