A Study of Legal Effects on Non-Life Insurance Contracts in Case of Aggravation of Risks

Abstract

This article investigates the impact of the aggravation of risks during non-life insurance contracts. The analysis of the character of risk and insurance reveals that the increasing of risk affects the insurer’s risk assessment and financial stability, ultimately influencing societal stability which relies on insurance as a risk management instrument. In other countries, laws provide insurers with certain rights when the risk increases, such as the right to terminate the contract, exclude coverage for increased risks, or raise premiums. Additionally, insurers may use various contractual provisions to manage risks that may increase during the cover period. However, there are no specific provisions dealing with this regard in Thailand and there is a lack of clarity in applying such terms. This article proposes that insurers can mitigate the effects of the significant changes of risk through contractual provisions. In the future, Thailand should introduce specific provisions on this matter.