Seminar: “Rules of misrepresentation in insurance contracts”, with Henrik Lando
This research analyses by how much the insurer should be allowed to reduce the agreed-upon indemnity when it turns out that prior to contracting the insured has misrepresented a fact relevant to her risk, and it is unclear whether the misrepresentation was due to a mistake or intentional. Rules differ significantly between jurisdictions; for example, the common law rule allows for rescission of the contract while the German rule allows no reduction in coverage in the case of simple negligence. The article analyses when a rule that is strict on the insured is more efficient than a more lenient rule. A strict rule renders it easier for an insurer to separate different types of risk without having to use other distortionary means of separation such as a deductible, but exposes the insured, who may have committed a mistake, to risk. In this trade-off, the optimal rule depends, among other factors, on whether the insurer can commit to an auditing strategy, on the cost for the insurer of auditing types when claims are presented, on the degree of risk aversion of the insured, and on the likelihood for the insured of making an inadvertent mistake.
Henrik Lando is Professor of Law & Economics at CBS, Law Department
The workshop will start with a sandwich lunch at the Law Department (Solbjerg Plads 3, C.5) at 12:00. The presentation begins at 12:30
Organizer: Law Department - Georg Ringe (firstname.lastname@example.org)