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RLLI Section 9
1. Do you agree with the decision of the ALI to reject the "contribute-to-the-loss" approach? Does the rejection of that approach incentivize insurers to ask an excessive number of questions on the application in the hopes that, if a big claim comes in, they will find some misrepresentation?
2. In Comment b, the ALI recogniz as a problem a scenario in which "high-risk policyholders intentionally and dishonestly understating their risks in order to obtain coverage at a price that is subsidized by honest members of the same risk pool." Is the ALI consistent in recognizing this problem? If not, what countervailing principles are present?
3. What is the consequence of the agent knowing that a representation of the insured is false and assuring the insured that it really doesn't matter? Do you agree with that consequence? How does an insurer protect itself against the risk caused by this legal rule?
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