In Kayembe-Kabeya v. Industrielle Alliance, assurance et services financiers inc., 2026 QCCS 1714, the Superior Court sets the record straight on the principle of contractual “utmost good faith”.
The Facts
In September 2019, Ms. Ricady Mede (hereinafter “Mede”) purchased a life insurance policy from Industrielle Alliance (hereinafter the “Insurer”). A few months later, she died of intestinal cancer. A claim was subsequently submitted by the beneficiary.
The Insurer’s investigation revealed, that when applying for the policy, Mede had failed to disclose significant facts concerning her mental health, including psychiatric consultations, psychological diagnoses, ongoing medication and a complete leave of absence from work.
The Insurer sought to have the policy annulled on the basis that these omissions had distorted its assessment of the risk. The beneficiary, for his part, argued that the Insurer should have conducted more thorough investigation at the underwriting stage.
The Judgment
The Court first reiterated that article 2408 of the Civil Code of Quebec imposes a positive duty on an applicant to disclose all circumstances that are likely to materially influence the insurer’s assessment of the risk. An applicant cannot decide for themselves that certain information is immaterial or assume that the insurer is already aware of it.
In this case, the evidence established that the answers provided by Mede were “at the very least inaccurate, if not outright false” [our translation] and that such conduct could not be characterized as “reasonable.” The undisclosed information concerned precisely the type of information the Insurer sought to obtain in order to assess the proposed risk. Moreover, the expert evidence presented by the Insurer satisfied the Court that a reasonable insurer would have declined to underwrite the risk had this information been disclosed.
The beneficiary submitted that the Insurer had itself failed to fulfill its duty to inform. In his view, certain information contained in a previous insurance application, together with a few alleged shortcomings in the underwriting process, should have prompted the Insurer to conduct further investigation before issuing the policy.
The Court rejected this argument. In the absence of ambiguity or reasonable doubt as to the scope of the risk, an insurer is not required to question the applicant’s answers. Its obligation is not to discover what the applicant was themselves required to disclose, nor does the fact that the application was analyzed using software to shift responsibility for Mede’s omissions to the Insurer.
Finally, the Court also reiterated that the nullity of an insurance policy does not depend on there being a causal connection between the undisclosed information and the loss. Rather, what must be assessed is the impact of that information on the insurer’s assessment of the risk at the time the policy was issued. In this case, the undisclosed information concerned Mede’s psychiatric history, whereas her death resulted from cancer. Despite the absence of any connection between the two, the Court concluded that the annulment of the policy was justified, since a reasonable insurer would have declined to provide life-insurance coverage had the relevant information been disclosed. The action was therefore dismissed.
Key Takeaway
While an insurer must conduct a diligent assessment of the risk, that obligation cannot replace the insured’s duty to disclose. As this decision illustrates, a material failure to disclose at the underwriting stage may result in the nullity of the policy, even where the undisclosed information has no connection to the loss.
