Misrepresentation

  • Material Misreprentation
  • (4) At what stage do projections become misrepresentations?  (Report - p750)
  • The classic case of misuse, which called the problem to our attention, had to do with a disclosure form given a policyholder or applicant and sent to us in what appeared to be horror by an agent of another company.
    • On this form the insured was a girl, age five. Deposits were illustrated as accumulated at 9% for sixty years.
    • The company does not earn 9% and has no investments with sixty-year maturities.

--  W. Keith Sloan, Life Actuary, Arkansas Insurance Department

1975-1, NAIC Proceedings

  • 2. Standardized Assumptions.
    • Lester Dunlap (La.) also expressed interest in the idea of standardized assumptions to show how the policy works.
      • He said projections far into the future can border on misrepresentation.

1994-3. NAIC Proc. 

  • A misrepresentation is judged to be "material" if "a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question

....'" (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 332 [120 Cal.Rptr.3d 741, 246 P.3d 877].)