ACTIVE AND PASSIVE DUTY OF DISCLOSURE :

The question here is what method is used to acquire the material information.

Two different approaches are used in this respect. The first – an “active” duty of disclosure, and the second approach is characterized as a “passive” duty of disclosure. The former argues that the duty to assess what information is material for the insurer rests with the person effecting the insurance. On the other hand, a passive duty of disclosure implies that the insurer will have to define what information is material through a questionnaire. A passive duty of disclosure implies that information not asked for is not material.

The common law systems seem mainly to apply an active duty of disclosure, but elements of a passive duty of disclosure is found in some countries in the form of proposals.