The High Court has ordered American International Assurance Company (AIA) and its Singapore-incorporated entity to pay nearly S$1.6 million, with interest, to a wealthy elderly Indonesian couple cheated by their agent into buying a fake insurance policy.
The two entities were vicariously liable to Mr Ong Han Ling and his wife Enny Ariandini Pramana, who were sold the bogus US$5.06 million AIA Thank You policy in 2002 by former AIA insurance agent Sally Low, High Court judge Belinda Ang ruled.
The Ongs, both 78 and Singapore permanent residents, discovered in 2008 that the policy did not exist.
There was a close connection between Low’s fraud and her relationship with AIA, Justice Ang wrote in her 141-page judgment released on Friday (Dec 29). Their relationship was capable of giving rise to vicarious liability – which is no longer confined to employment relationships, she said.
Regardless of whether Low was AIA’s employee, she was not an independent contractor and performed a “wide range of functions as AIA’s insurance agent”, Justice Ang said.
AIA’s control over Low was very similar to that of an employer training, managing, supervising and disciplining its employees, she said.
Low – who was jailed eight years in May last year for cheating and other offences – promoted AIA’s policies to prospective policyholders, advised them, and delivered the policy application documents to AIA.
“AIA would also correspondingly accept policyholders’ instructions from agents like Sally without further verification,” said the judge.
Low had “almost exclusive control over the AIA documents and information eventually received by the Ongs”. As such, the insurer increased the risk of her fraud by giving her the opportunity to forge documents from AIA and represent them as genuine.
Low’s fraud was perpetrated within a framework where AIA encouraged its agents, especially top-performing ones, to develop close relationships with high net-worth policyholders, with little intervention.
AIA relied on its agents to promote and market its policies to the general public, and its business model depended on agents to bring prospective policyholders to AIA, said Justice Ang.
The life insurance industry is also regulated in a manner that expects AIA to take responsibility for management of its agents such as Low, who are the “lifeblood” of the insurer, she added.
After the Ongs bought the bogus policy, Low instructed AIA to use the money to buy different AIA policies in their names, with some applications containing forged signatures.
In 2004, she told them their names had been mistakenly used for the policies because of computer crashes at AIA and assured them that the AIA Thank You Policy was still in force.
She then induced them to surrender three of the other AIA policies and return most of the surrender proceeds to AIA through her personally. The Ongs hence gave her sums amounting to S$6,288,058 and US$1,000,000.
Low misused the funds to purchase stocks and properties in her own name. The Ongs commenced the suit against AIA and a related firm, Motion Insurance Agency, in 2012.
Justice Ang on Friday also dismissed AIA’s counterclaim that the Ongs had conspired with Low to defraud AIA, finding Low’s account of the conspiracy to be “completely fanciful and unconvincing”.
The Ong’s claim against Motion Insurance Agency was also dismissed as the agency and Low did not have a contractual relationship, and both worked for and were remunerated by AIA.
No comments:
Post a Comment