Analyses: Remedies for Misrepresentation Inducing a Long-Term Insurance Contract: The Didcott Principle

• Jurisdiction: South Africa
• Pages: 387-395
• Author: MFB Reinecke
• Date: 25 May 2019
• Published date: 25 May 2019

Analyses

Remedies for Misrepresentation Inducing a

Long-Term Insurance Contract:

The Didcott Principle*

MFB REINECKE

Emeritus Professor of Private Law, University of Johannesburg

Assistant Ombudsman for Long-Term Insurance, Cape Town

1 Introduction

In 1991 Didcott J (as he then was) recommended that the existing insurance

legislation should be amended to provide that an insurer could cancel a policy

on the grounds of misrepresentation or breach of warranty only if it would not

have entered into the contract had it not been misled by the insured (see Pillay

v South African Life Assurance Co Ltd 1991 (1) SA 363 (D)). He suggested

that if the insurer would have contracted on different terms if it had not been

misled, alternative remedies should be made available to the insurer. This is

what is meant by the Didcott principle.

This recommendation involves one of the most important issues facing the

law of insurance today. It applies to both long-term and short-term insurance

but will only be considered in the context of long-term insurance here.

2 Misrepresentation: Wrongful Conduct

We f‌ind ourselves in the area of misrepresentation and the remedies for it.

Misrepresentation is a wrongful act or delict. Misrepresentation may be by

way of an omission or positive conduct, but it would appear that insurers and

underwriters by and large are of the view that non-disclosure covers the whole

f‌ield of misrepresentation! Non-disclosure entails a failure to speak where

there is a duty to speak, while a misrepresentation by positive conduct occurs

if a person creates by his conduct a wrong impression relating to a past or

present fact, for instance, a wrong answer to a question in the proposal for

insurance. It may be appropriate if not customary to refer to a positive

misrepresentation as a mis-disclosure.

For present purposes, it is important to keep in mind that a misrepresenta-

* This is the revised version of a talk delivered to the Society of Insurance Medical Underwriters

(SASIMU) in Johannesburg on 10 September 2008.

387

(2009) 21 SA Merc LJ 387

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