The problem of the object of personal insurance
In the original version of Art. 2 of the Law on Insurance, insurance was defined as the protection of property interests. Corresponded to this norm and Art. 4 of this Law, which emphasized that the object of both property and personal insurance is property interest.
In the Civil Code of the Russian Federation, this issue is settled differently. The Code recognizes property interest as an object of property insurance (Articles 929, 942, 947), but is silent about the object of personal insurance. So, in Art. 934 nothing is said about interests at all. Indicative in this regard and Art. 942. If an insurance object is mentioned in it as an essential condition of a property insurance contract and it is emphasized that it is a property interest, then the insured person who is obviously a subject and not an insurance object is named as the relevant essential condition of a personal insurance contract. There are no rules in the Civil Code of the Russian Federation in which the object of personal insurance or insurance interest in personal insurance would be mentioned with sufficient certainty.
An additional confusion on this issue was introduced by the new version of the Law on Insurance. In it from Art. 2 of this Law, the reference to the property nature of interest was withdrawn, but in Art. 4 of this Law, it remains.
Thus, the question of the object of personal insurance in Russian law cannot be considered definite.
In European law, this issue is resolved in different ways. So, in the UK, the Life Insurance Act of 1774 also introduced a requirement for the recipient to pay property interest in the life of the insured person. In continental legal systems, there is no such strict requirement (see Article 159 of the German Insurance Contract Act of 1908, Article 74 of the Swiss Insurance Contract Act of 1908, Articles 1882 and 1919 of the Civil Code of Italy). Neither in the German, nor in the Swiss Laws, nor in the Civil Code of Italy there are also references to the need for an insurance interest in personal insurance.
Nevertheless, the question of the object of personal insurance needs to be resolved, since otherwise the nature of personal insurance is not clear. If there is no insurance object in personal insurance, i.e. interest to be protected, the protective nature of personal insurance is also called into question. In the absence of an insurance object – insurance interest – the principle of compensation for personal insurance will not apply and the question will arise about the playful nature of personal insurance relations.
Criticism of the available options for resolving the issue
The first solution is to recognize the absence of the insurance object in personal insurance. The texts of the continental codes, including the Civil Code of the Russian Federation, which do not even mention the object of personal insurance in favor of this, speak only of the insured person.
Art. 1882 Civil Code of Italy. It defines the insurance contract as follows: “Insurance is a contract under which the insurer, against payment of the premium, agrees to indemnify the insured within the specified limits for losses caused by an accident, or to pay capital or rent in the event of an event relating to a person’s life” (Codice Civile. Con il trattato CE e leggi complementari / Ed. By G. Simone. Napoli, 2000). It is noteworthy that the term “accident” was used to denote the insured event for loss insurance (danno) (“sinistro” The Italian word “sinistro” can mean any malicious event), and to indicate the insured event for life insurance (vita umana) – “event” (“evento”). In other words,
Note. In Italy there is no division into personal and property insurance, but a division into loss insurance and life insurance (with the literal translation of the expression “assicurazione sulla vita”).
In Russian law, the thesis has long been stated that a property insurance contract and a personal insurance contract are completely different contracts. The first is aimed at compensation for harm, and the second has no connection with compensation for harm, since there is no need to talk about harm in personal insurance.
However, as already noted in § 3 of Ch. 1 of this work, when discussing the differences between insurance from games and betting, the only thing that distinguishes insurance from games and betting is the existence of an insurance interest that is subject to protection. One of the US courts in 1881 noted in its decision the following: “In all cases there must be a reasonable basis arising from the relationship of the parties to the contract, which may be monetary, and also due to blood or other close relationship, in order to expect any benefit or the benefit of the life of the insured, otherwise the contract is nothing more than a bet on which the party receiving the policy is directly interested in the early death of the insured “(Keeton RE, Wides AI Op. cit. P. 178 – 179).
In addition, despite the fact that there is no mention of insurance interest in personal insurance in the Civil Code of the Russian Federation, no one calls into question the existence of a risk in a personal insurance relationship. In many norms of the Civil Code of the Russian Federation, the term “risk” is referred to in relation to any insurance, and not only to property insurance. However, as will be shown in the next chapter of this paper, risk is always accompanied by interest, and interest by risk. To this we can add that of all the events, in the event of the occurrence of which personal insurance is carried out, the Russian legislator in paragraph 1 of Art. 934 of the Civil Code of the Russian Federation singled out “causing harm to life or health”, and, as I wrote above, interest is the flip side of harm.
For all these reasons, the majority of modern domestic authors who study insurance interest do not question the existence of an insurance object – insurance interest – in personal insurance.
The most common option among researchers for solving the problem under consideration – the object of personal insurance as well as property insurance is property interest. For example, S.A. Rybnikov in 1948 wrote that personal insurance, as well as property insurance, should be based on compensation for losses. Currently, this is not exactly the same, but a similar approach is based primarily on the text of Art. 4 of the Law on Insurance.
However, in this case, many insurance contracts cannot be recognized as valid. For example, a son who is dependent on his father will be able to conclude a valid insurance contract for the death of his father, because with the death of his father he will lose his maintenance, i.e. he has a property interest in his life. On the contrary, the son, whose dependent the elderly father is, cannot conclude a valid life insurance contract, since he has no property interest in his father’s life (Ivamy ERH Op. Cit. P. 22). With the death of his father, he will only get rid of unnecessary expenses. There is no insurance object – there is no insurance itself.
The Civil Code of the Russian Federation and other continental legal orders nevertheless allow such insurance. The potential for abuse that is obvious to such contracts is substantially reduced due to the requirement of consent to the personal insurance of the insured person.
In this case, however, the question arises about the nature of the property interest, which is the object of personal insurance. One explanation for the nature of this interest is that both property and personal insurance are provided in case of loss. However, in property insurance, losses can be calculated, and therefore it is precisely the amount of losses that is subject to compensation. In personal insurance, losses exist in principle, but it is practically impossible to calculate them, therefore, the legislator allows for personal insurance to pay a predetermined amount without proving the fact of causing losses and calculating them, as, for example, in case of forfeit. This point of view is analyzed in detail by V.I. Serebrovsky, L.N. Klochenko and K.I. Pylov.
However, the obligation to pay the specified amount of money arises only in case of harm. There is no such obligation before the injury. Consequently, there is an interest in obtaining this amount before the damage, i.e. before the occurrence of the insured event, it is absent and it is not clear what is the object of protection then. This flaw is trying to correct V.S. Belykh and I.V. Krivosheev, who writes: “Within the framework of a personal insurance contract, the subject of insurance protection is an intangible good, the protection of which gives rise to the insurance interest of its carrier, realized through the property right to receive the insurance amount.” Here, the property character is of interest related to the right to receive money, but not from the inflicter of harm, but from the insurer under an insurance contract.
However, it is not enough just to have an interest in receiving a certain amount of money under the contract to consider the relationship insurance. If the sole interest of the insured is his interest in receiving payment from the insurer, such a relationship should be qualified as a game. When concluding an insurance contract, there are two different interests: interest in receiving a payment (which is also present in games, bets, lotteries) and, as M.I. Bragin, “the interest is that the insured event does not occur. The object of insurance is the latter.
Such an explanation of the property nature of the insurance interest to be protected in personal insurance leads to the same result as the refusal to recognize the presence of interest in these relations as an object of protection.
A situation arises when both answers to the question about the object of personal insurance — no object of protection or the object of protection is a property interest related to life, health, etc. — cannot be considered satisfactory. Recognition of the absence of the object of protection turns personal insurance into a game or bet, and recognition as an object of protection of property interest either turns personal insurance into a game or bet, or does not explain the possibility of concluding a life insurance contract for a person on whom the policyholder is not financially dependent.
Personal Interest Insurance Interest
We will try to understand the nature of insurance interest in personal insurance, starting from the listing of groups of events in case of occurrence of which such insurance is carried out (see paragraph 1 of Article 934 of the Civil Code of the Russian Federation). These event groups are as follows:
1) causing harm to the life or health of a citizen;
2) a citizen has reached a certain age;
3) the occurrence in the life of a citizen of another event stipulated by the contract.
Causing harm to the life or health of a citizen
The first group of events is about harming personal intangible goods. In this case, it is completely clear that the insurance object is present and this object is interest related to the possible harm to these goods, in other words, the interest is that this harm is not caused. What is the nature of this interest and is it property?
The figure shows the possible consequences of harm to life or health:
I believe that it is clear that direct harm can occur when causing harm to life or health, i.e. additional expenses that have to be incurred either for treatment or for the repatriation of the body, funeral, etc. It is also clear that in both cases, physical and mental suffering, or moral harm, is inflicted. Indirect losses may occur. For example, injuries sustained in youth can lead to serious costs in old age, as the mechanisms that compensate for the consequences of this injury cease to work.
Moreover, for direct losses, both their causal relationship with the event and the magnitude of these losses can be proved. For indirect losses, proving a causal relationship is very problematic. Therefore, the proof of their magnitude is also problematic. And for moral harm there is no way to determine the value, except in court.
Therefore, when insuring against damage to life or health, one can raise the question of compensation for direct losses, but only if the other consequences of the damage are not insured. This is exactly what they do in health insurance, in which the costs of medical care are insured. In health insurance, the insured interest is purely proprietary.
On the inclusion of indirect losses in personal insurance, write L.N. Klochenko and K.I. Pylov: “… property insurance is always based on the existence of losses, while personal insurance is only based on the possibility of such losses …”. This reasoning is not entirely correct, since it is not about the existence of either the possibility of losses, but about their provability or unprovability. However, the very idea of these authors is clear – this reasoning was given by them in order to explain why the legislator does not require proof of losses in personal insurance, but allows the payment of a predetermined amount. By the way, sometimes there is a problem with proving the magnitude of direct losses, despite the fact that their presence is obvious, for example, if the documents for the payment of some expenses are lost and their recovery is difficult.
When insurance against damage to human life or health, as a rule, they do not require proof of their expenses, but pay a pre-agreed amount. However, if you wish, you can insure specific expenses (for example, medical insurance), and then the insurer will pay the costs, i.e. direct losses. At the same time, I see no reason not to include in the object of personal insurance in case of injury to life or health non-pecuniary damage caused by death or damage to health.
In my opinion, when a pre-agreed amount is paid in case of injury to life or health insurance, insurance is carried out in case of damage to these personal intangible benefits of any possible consequences, both property and non-property.
If we consider personal insurance as insurance against any possible consequences of harm to any personal intangible benefits (and not just life or health), then it is easy to answer all the questions posed above.
Personal insurance is not a game deal, since personal insurance protects the interest associated with any possible consequences of harming personal intangible goods. This interest can be both property and non-property, since the consequences can be both property and non-property.
A son containing a father can insure his life, because if his father dies, he is harmed, though not property, but nothing prevents insurance of interest related to possible moral harm. In view of the extreme difficulty of proving such non-material damage and in order to avoid possible abuse, such insurance must be confirmed by the consent of the insured person, as is customary in all continental law and order.
Reaching a citizen of a certain age
Let us now consider the question of how the protective nature of the relationship can be justified in case of insurance in case a person reaches a certain age.
When it comes to retirement age and, accordingly, pension insurance, the question is clear: the ability to work, activity, i.e. harm to health with all consequences. But often parents insure their children until they reach adulthood, before marriage, etc. In all such cases, people save up money before the event.
However, one should not forget that the corresponding event may not occur – a person may not live to the age provided for in the contract. For such situations, the contract provides for the payment of a certain amount – contracts are not concluded in which, in the event of the death of the insured (another insured person), all the accumulated money remains with the insurer.
Thus, with survival insurance, protection is provided in case of damage to life. But at the same time, an additional condition on the payment of the accumulated amount in the event that a malicious event does not occur is included in the contract.
In § 1 of this chapter, it has already been shown that in order to avoid disputes on the issue of interest in surviving to a certain age, the legislator positively pointed out the possibility of applying the insurance model to relations of this kind.
The offensive in the life of a citizen of another event stipulated by the contract
In the text of the norm, important words “in life” should be noted – the legislator emphasizes that the event should occur precisely in the life of the insured (another insured person). This should be understood in such a way that an event may or may not occur, since a person will not live to see it.
There is an analogy with the achievement of a certain age, only we are not talking about reaching a certain age, but about another event. A person will either live to a certain age, or will not survive, may survive until marriage, or may not survive. Insurance risk consists precisely in surviving or not surviving.
That is why in paragraph 1 of Art. 32.9 of the Insurance Law Act, insurance against death, surviving to a certain age, the occurrence of another event is called life insurance.
If a person has an insured summer house burned out – formally this, of course, is also an event in the life of this person, but it has nothing to do with personal insurance in general, or life insurance in particular, since with such insurance it is not a question of a person until his dacha burns out or does not survive. The insurance risk in this case is not manifested in survival. Accordingly, for the case under consideration, insurance is carried out in case of damage to life, i.e. has a protective character.
Thus, the object of personal insurance is interest (property or non-property) related to the possible harm to personal intangible benefits.