Friday, September 6, 2024

MCIS Decline Claim On Non-disclosure & Material Misrepresentation

The High Court here has dismissed a suit brought by the estate of a man against an insurance company for breach of contract to pay close to RM2 million to the beneficiaries of three policies.

Material Misrepresentation - The Court determine that MCIS Insurance Bhd had established, on a balance of probabilities, that the deceased man, D Jachiswaran, materially misrepresented and failed to disclose crucial information regarding his medical history, occupation and income details in his insurance proposal forms. The Court also ordered R Siva Prakash, the executor and trustee of Jachiswaran’s estate, to pay MCIS RM40,000 in costs.

The Court determined that the non-disclosures and misrepresentations by the deceased were deliberate and reckless, entitling the insurance company to nullify the policies under Paragraph 15 of Schedule 9 of the Financial Services Act 2003.

The defendant fulfilled its statutory duties by asking clear questions and adequately informing the deceased of his disclosure obligations. The Court said based on the expert evidence, the signatures on the proposal form for one of the three policies, P4 (for RM1.5 million), were forged, rendering the policy void ab initio (from the beginning). 

While the defendant’s investigation process had some shortcomings, these were not significant enough to invalidate its decision to repudiate the policies. The Court said the insurance company’s overall conduct in handling the claims was reasonable and justified and did not amount to bad faith. The defendant did not engage in unconscionable conduct in repudiating the policies as its actions were based on established principles of insurance law,

The plaintiff (executor and trustee) had failed to rebut these findings with credible evidence.
The suit was filed three years ago following the insurance company’s refusal to pay out three life policies.

The issue before the Court was whether the deceased failed to disclose material facts about his health and income in the policy proposal forms, enabling the defendant to nullify the policies. Secondly, the defendant alleged that the signatures on one of the proposal forms were forged.

3 Policies - According to the facts of the case, the deceased took out three policies with the insurance company between 2016 and 2019. The deceased passed away on March 30, 2020, due to multiple injuries sustained in a road traffic accident. On Aug 8, the same year, the plaintiff submitted a claim to the defendant for all the policies.

Two were life assurance policies with payer benefit riders on the lives of the deceased’s two children with a total payable amount of RM405,818. Jachiswaran had bought a RM1.5 million life insurance policy for himself.

On April 21, 2021, the defendant repudiated the claims on the policies and treated them as void. In the suit, the plaintiff had sought to enforce the policies for the children and for RM1.5 million to be paid out.

No comments:

Post a Comment