Life Insurance Agent & Ghost Customers

Desperate to achieve her sales targets, a financial adviser  forged multiple signatures in registering insurance policies for multiple victims. Lai Mei Lin, 32, was sentenced to eight months’ jail on Aug 6 after she pleaded guilty to a total of five charges – two charges of unauthorized access to computer material and three relating to forgery. Four additional charges over similar offences were taken into consideration during her sentencing.

Ghost Customer - At the time of the offences, Lai had held the position of assistant vice-president and was working as a unit manager with Manulife Financial Advisers. In December 2019, Lai met a former colleague and proposed using his personal details to register for an insurance policy. Lai told him that he would not have to pay for the policy as she would do so.

Lai told him that she wanted to hit her sales target and was willing to spend money to complete policies. He gave her his personal details, including a copy of his NRIC. On Dec 20, 2019, Lai registered an insurance policy with her former colleague’s particulars using a company account belonging to a financial representative she was supervising.

Lai logged in to her down-line's account to register the insurance policy for her former colleague. With neither Lai’s former colleague nor Tan physically present, Lai then dishonestly affixed eight false signatures to various documents before submitting them to herself for approval.

After Lai arranged for payment of the policy premium of $7,031.20 on behalf of her former colleague, Manulife Financial Advisers paid Lai, Tan and Lai’s branch manager a total of $8,354.30 in commission, overriding fee and bonus payments.

Surrender Policy - On Dec 20, 2020, Lai filled in a surrender form with her former colleague’s details and a fake signature purportedly signed by him without his knowledge, and submitted it to her company. In a similar manner, Lai caused three other policies to be registered under three different people’s names. One of them involved another financial representative she was supervising.

On April 29, 2022, Tan made a complaint to Manulife Financial Advisers regarding Lai and the company conducted an investigation, only to find it inconclusive then due to Lai’s lack of cooperation.

Walgreens To Close More Store

Walgreens is set to close a substantial number of its roughly 8,600 locations across the United States as the company looks to reset the struggling pharmaceutical chain’s business. The company didn’t announce a specific number of store closures, but it is planning “significant” closures of underperforming stores across America as part of a multiyear optimization program.

Changes Are Imminent - Company CEO said that “changes are imminent” for the roughly 25% of stores that aren’t profitable and Walgreens’ strategic review will “include the closure of a significant portion of these underperforming stores. Company is at a point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently.

The closures would focus on locations that aren’t profitable, too close to each other or stores struggling with theft. The changes would take place over the next three years. The company will consider additional closures if performance doesn’t improve. The “vast majority” of employees working at affected stores will be offered jobs elsewhere.

Stock Plunges On Weak Outlook - Walgreens’ shares fell 20% to its lowest level in decades. The company also said in its earnings statement that it has slashed its full-year profit outlook.

Walgreen continues to face a difficult operating environment, including persistent pressures on the US consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Company results and outlook reflect these headwinds.

Inflation has taken a big bite out of the drug store business – both at the front-end and the back-end of pharmacies. Shoppers are “becoming increasingly selective and price sensitive on their selections. Operating environment to remain challenging” in the US and doesn’t “expect an improvement.

Sales rose 2.6% to $36.4 billion for the quarter. That might not “look unreasonable, but this is running below inflation and, across some segments of the business, represents a loss of market share.

Particularly concerning for Walgreens was its retail sales falling 4% for the quarter. But that isn’t surprising because it’s front-of-store struggles have been “exacerbated by the cost-of-living crisis which has seen customers curtailing the volume of products they buy and shopping around more for the best deals and bargains.

Walgreens slashed prices on more than 1,000 items in May following rivals in an effort to lure back inflation-weary shoppers turned off by high prices. But the company said Thursday that would hurt its profitability.

Struggles For Drug Stores - Major drugstore chains, including CVS and Rite Aid, have struggled in recent years because of declining profits from filling prescriptions. They’ve declined because of lower reimbursement rates for prescription drugs and new competition from Amazon.

The front end of drugstores, where they sell snacks and household staples, also face pressure from larger competitors, including Target and dollar stores.

Walgreens’ store assortment will change and it has removed eight national brands and instead started selling similar items produced by its house brands or “preferred partners.”

Although drugstores benefited during the pandemic from people getting Covid-19 vaccines, fewer consumers are visiting stores to shop. Prescription volumes are also falling because people are getting fewer elective procedures.

GLP-1 drugs, which include Ozempic and Mounjaro to treat weight loss and diabetes hasn’t been a boon for the chain. Wentworth told the Journal it’s losing money on filling those prescriptions.

Pivoting the business model hasn’t helped, either. Walgreens will no longer have a majority stake in VillageMD, a primary care network that the chain once had major plans to open full-service doctors’ offices in hundreds of its stores. Walgreens said the value of its ill-fated VillageMD merger has fallen so much, it was forced to take a massive $6 billion writedown on its balance sheet.

In the past few years, CVS has closed about 900 locations and Rite Aid, which entered bankruptcy in October, closed more than 100. 

RHB Policy Accident Claim - Unenforceable

A widow has been denied leave to appeal a ruling barring her from bringing a claim against an insurance company over a construction site accident in which her husband lost his life almost five years ago.

Grant Of Leave Rejected - A three-member Federal Court bench said the four legal questions posed by S Jachintha did not warrant the grant of leave to appeal under Section 96 of the Courts of Judicature Act 1964. To secure leave, the applicant was required to satisfy the court that the appeal raises novel legal and constitutional questions of public importance for the first time.

The decision effectively affirmed the Court of Appeal’s ruling that a construction area does not fall within the definition of a road under the Road Transport Act 1987 (RTA).Section 2 of the RTA provides that a road means any public road and any other road to which the public has access

On Nov 23, 2019, Jachintha’s husband N Lingappan, a lorry driver, was involved in an accident at a construction site in Banting, Selangor. RHB was the insurer of a tipper truck owned by Twe Lai Poh, which was driven by Rahman Sahaba.

The mishap occurred when Rahman was attempting to unload earth from the lorry. Its bucket tumbled over and struck the lorry driven by Lingappan, who died in the accident. Two years ago, his 33-year-old widow filed a negligence suit in the sessions court in Sepang.

RHB Intervened In The Suit. The insurance company also filed an originating summons at the High Court in Kuala Lumpur seeking a declaration that the policy was unenforceable because the accident did not take place on a road

.On Oct 25, 2022, the High Court declared that the insurance company had no liability under Section 91(1)(b) of the RTA. Jachintha’s appeal to the Court of Appeal was dismissed, giving rise to her application to the Federal Court.

Allianz Failed to Decline Claim

The High Court here has upheld a lower court decision in favor of a bankrupt who had purchased insurance, saying the onus was on his insurer to carry out due diligence. The court also said that any contract entered into good faith was legally binding even when one party was bankrupt.

Allianz Declined Claim - The High Court ruled that Allianz General Insurance Company (Malaysia) Berhad must now honor a policy it sold to 58-year-old mechanic Chong Hing Fook, who lost his left thumb in a workplace incident more than six years ago. Chong had to have his left thumb amputated after a car jack failed, causing a car tyre to land on and crush it on May 20, 2018, at TDS Tamil Enterprise in Gurun, Kedah.

Chong, who had purchased the policy from Allianz on March 13 that same year, had sought treatment at a private hospital in Sungai Petani, with the insurer covering the RM11,279.65 surgery. However, when he claimed for the remainder of the sum and permanent disability benefits, the insurer declined on grounds that his failure to disclose his bankruptcy when purchasing the policy was a material non-disclosure.

Bankrupt - Allianz found that Tan had been declared a bankrupt in 2004. According to court filings, the insurer argued that had they been aware of Chong’s financial standing, they would have not insured him from the onset.

The insurer also claimed that Chong had failed to secure the permission of the insolvency director-general prior to applying for the policy. Chong subsequently filed an originating summons against Allianz, and the sessions court here ruled in his favor in 2022.

Allianz Underwriting - In its ruling, the lower court found that Allianz failed to conduct due diligence on Chong and failed to question him on his bankruptcy status. 

Citing Sections 38 and 54 of the Insolvency Act 1967, sessions judge Nasir Nordin ruled that being a bankrupt did not prevent a bankrupt from entering into a bona fide (good faith) transaction.

Section 38 states that a bankrupt can maintain an action for damages in respect of an injury to his person without the previous sanction of the insolvency director-general, while Section 54 provides that a bankrupt’s transactions are valid if entered in good faith.

The court also considered various provisions in the Financial Services Act 2013, particularly Section 5 and Schedule 9, which outlines the insurer’s duty to perform due diligence and ensure all necessary information is obtained before considering the insurance proposal form submitted by Chong.

The High Court upheld the sessions court’s ruling and dismissed Allianz’s appeal.

Kuwait Finance House Existing Malaysia

Kuwait Finance House (Malaysia) Bhd (KFH Malaysia) announced on Wednesday that it has decided to voluntarily withdraw from the Malaysian market after 19 years of operation. KFH Malaysia was the first foreign Islamic bank that was granted a license under the Islamic Banking Act 1983 in 2005. It commenced branch operations on Aug 8, 2005.

KFH Malaysia is wholly owned by Kuwait Finance House, the first and largest bank in Kuwait and the second-largest Islamic bank in the world. The bank's major shareholder is the state of Kuwait.

Separately, KFH Malaysia reported that its profit before tax rose 22.7% year-on-year (y-o-y) to RM88.1 million for the financial year ended Dec 31, 2023 (FY2023), on the back of a higher revenue of RM371.6 million against RM364.9 million a year ago.

KFH Malaysia said the decision came following the group's international business strategic review to focus and expand in the Middle East.

While the group has business operations in Bahrain, Türkiye, Jordan, Saudi Arabia as well as affiliates in the United Arab Emirates, Malaysia was the only Asian country it had presence in, making Kuala Lumpur the regional headquarters of Kuwait Finance House in the Asia-Pacific region.

With KFH Malaysia's exit, the country is left with only one remaining stand-alone foreign Islamic bank, namely Al Rajhi Banking & Investment Corp (Malaysia) Bhd from Saudi Arabia.

HSBC Insurance & MSIG Tussle In Claim

A court has rejected an insurer's bid to get a second insurer to split a payout of about S$39,000 (US$29,100) to a worker who injured his finger at a building site. The construction worker was covered by two insurance companies, but only one - HSBC Life (Singapore), previously known as AXA Insurance - took part in contesting the claim.

After reaching a settlement with the injured worker for about S$39,000 despite multiple new injuries being added on, HSBC Life contacted the second insurance company, MSIG Insurance (Singapore), asking for the sum to be paid.

HSBC Life later launched a court application to get MSIG Insurance to foot half of the bill. In a judgment made available on Wednesday (Jul 31), District Judge Teo Guan Siew rejected the application, saying the settlement HSBC Life had reached with the worker was not "reasonable" in light of the "questionable nature" of the worker's various injury claims.

The Case - The worker, who was not named in the judgment, was employed by Long Hui Construction. The company had an annual work injury compensation policy under HSBC Life that indemnified it against any sums it might have to pay to employees who were injured due to work-related accidents.

The worker was assigned to a building project, with the main contractor Soil-Build taking out an insurance policy with MSIG Insurance to indemnify itself against any work injury compensation claims by employees linked to the building project.

On Oct 26, 2019, the worker was engaged in hacking work when a breaker - a heavy-duty demolition tool - fell on his right hand. He sustained a minor injury to his right index finger and was taken to a clinic at Fullerton Healthcare, which issued him two days of medical leave.

The worker's supervisor gave a similar account of the accident on the same day, and said the worker had stated he felt pain only in his finger and not anywhere else. As only two days of medical leave had been issued, his employer Long Hui decided there was no need to file any report with the Manpower Ministry (MOM).

The main contractor Soil-Build was later informed of the incident report, but did not notify its insurer, presumably because it also viewed the accident as minor, the judgment stated.

Three days after the accident, the injured worker visited Tan Tock Seng Hospital (TTSH). He complained of back and shoulder pain in addition to his finger injury, claiming that he had also fallen when the breaker landed on his finger.

Worker Initiates Claim & Adds Injuries - He then notified MOM about the accident and initiated a claim process under the Work Injury Compensation Act (WICA). Under the WICA claim process, the amount of compensation that an employer is liable to pay an injured employee is computed based on various factors, particularly the extent to which the injury has caused any temporary or permanent incapacity to the employee.

MOM sent a letter to Long Hui in February 2020 saying it had investigated the accident and would be admitting the claim by the worker over his injury to his finger and back. No mention was made of the right shoulder injury.

Two TTSH medical reports were prepared for the WICA claim, stating that the worker had sustained 15 per cent permanent incapacity for injuries to his back, shoulder and knee, and that he suffered 7.5 per cent permanent incapacity for his finger injury - for a total of 22.5 per cent permanent incapacity.

The judge noted that there had been no mention of the additional knee injury until, presumably, a subsequent assessment by TTSH.

MOM later issued a notice of assessment dated September 2020 for a sum of about S$19,700 based on a permanent incapacity rate of 12.5 per cent, lower than TTSH's assessment.

The notice of assessment is a preliminary assessment by MOM that parties can dispute by filing objections.

The injured worker was dissatisfied with MOM's notice of assessment and filed a notice of objection, which led to a series of pre-hearing conferences by the ministry in a bid to settle the claim without having to go to the Labour Court.

In the conferences, MOM asked if the injured worker had told the first doctor at the Fullerton clinic about his shoulder injury - and the clinic confirmed that this did not happen.

HSBC Life then told MOM that it was not agreeable to the assessment for the supposed additional shoulder injury.

However, a TTSH memo later showed that the worker had been attended to for knee and shoulder injuries in October 2019 at the hospital.

HSBC Life said this was the "turning point" because MOM showed parties the TTSH memo and supposedly advised HSBC Life to accept the assessment of 22.5 per cent permanent incapacity.

The judge said it was unlikely that MOM gave such advice based on its own notice of assessment, and the lack of evidence for such a claim.

After this, HSBC Life decided to settle with the injured worker and settled on a sum of about S$29,600 - an amount that was higher than indicated in MOM's notice of assessment.

After adding in medical leave wages and medical expenses, the full sum was S$39,035.44.

MSIG - Meanwhile, MSIG Insurance was unaware of the accident or the claim made by the injured worker because it had not been notified. HSBC Life later wrote to MSIG Insurance asking for the sum of S$39,035.44. It later revised this demand to half the sum - at about S$19,500, on the basis of double insurance.

Under the principles of double insurance, an insurer who has fully paid for a loss covered by another insurer may be able to claim contribution, said Judge Teo.

However, the insurer called upon to contribute may resist the demand on the basis that it would not have been liable under its policy, for example, because the insured person failed to give notice in time under policy terms.

A co-insurer that has not been notified of the claim could also argue it had been prejudiced as it was deprived of the chance to investigate or take part in the handling of the claim.

"While the legal position is not fully settled as regards the significance of notice and whether the co-insurer should be given an opportunity to participate in the handling of the claim, it is clear that if the insurer making payment was actually not liable or had paid in excess of its actual legal liability, then the no right of contribution would exist at law," said Judge Teo.

MSIG Insurance argued that HSBC Life had chosen to pay the worker's claim by consent and not because MOM found Long Hui liable after a hearing. In doing so, HSBC Life had voluntarily assumed liability and should not be entitled to claim contribution from a co-insurer.

MSIG Insurance also said HSBC Life had acted unreasonably in failing to notify MSIG Insurance in good time of the claim and their intention to settle. It added that the amount HSBC Life settled on with the worker was more than it was legally liable for, and so MSIG Insurance should not have to contribute to the sum.

Judge's Finding - Of the three reasons, Judge Teo dismissed the first and said the second might be a factor but was not determinative. Instead, he said HSBC Life's settlement with the worker was not reasonable, and there was nothing to contradict the evidence that the worker's injury was minor.

Judge Teo said HSBC Life had not done "everything it could reasonably have done to challenge the worker's claim". Indeed, it might be queried whether the circumstances of the accident were capable of causing injuries to the back, shoulder and knee, let alone injuries of an extent that causes permanent incapacity," said the judge.

"Based on the photographs in the incident report showing the work site and a re-enactment of the accident, the worker was squatting when the breaker fell on his right hand. The manner in which the accident took place would appear inconsistent with injuries to the back, and especially the shoulder and knee."

Judge Teo said HSBC Life should have exercised greater due diligence in light of the questionable nature of the worker's injury claims and made further investigations. He added that his decision does not suggest that every WICA claim must be challenged by an insurer or every case taken to court before a co-insurer makes a contribution.

Instead, every case must be looked at on its own facts and circumstances.

Climate Change Rising Premium

Consumers preparing to renew their homeowners insurance policy may experience some unexpected sticker shock. Between May 2022 and May 2023, home insurance prices rose an average of 21% at renewal time. 

A rise in catastrophic severe weather events - contributed to this jump, experts say, and the rate of price increases is not expected to slow. As insurers face higher costs, they pass those along to consumers in the form of pricier premiums. However, insurers don’t share data on individual homeowners’ premiums and risks, so it’s difficult to calculate just how climate risk is factored into the price of policies. 

The levels of risk and the kinds of hazards that a property can be exposed to are massively changing. Right now there’s a lot of confusion, not just among the homeowners, but also among the insurers about how they should be pricing this actuarially.

Though home insurance premiums jumped significantly in price last year, it isn’t a new phenomenon. To that point, between 2012 and 2021 the average premium rose from $1,034 to $1,411, according to the Insurance Information Institute.

Lack of data - The data is pretty minimal and insurers don’t share how much they’re charging individual homeowners with the world, and there’s not a lot of reporting. Insurance sector leader, said the industry does gather this data on weather-related losses to inform policy premiums, but the detailed data isn’t publicly accessible.

Insurers are pulling back in high-risk areas - The cost of home insurance might be rising, but for some in areas at risk of flood or fire, homeowners may have few options.

In May 2023, for example, State Farm stopped accepting new applications for California policies. Allstate announced in November 2022 that it would pause new home, condo and commercial policies in the state.

Insurance companies “are not in the business of giving you money just because you need it, and they are not in the business of doing the right thing just because it feels like the right thing. They are businesses that are trying within a set of laws and regulations to make a profit.

Fewer and pricier insurance options can prove to be a significant barrier to homeownership. 
Florida’s legislature created Citizens’ Property Insurance in 2002 as an option for Floridians who couldn’t find home insurance in the private market. California’s FAIR plan was established as a statute in the state’s insurance code to provide fire coverage unavailable in the traditional market, though it’s not a state or public agency.

Though state-run programs might serve as a last resort, they don’t always provide the same quality of coverage that a private insurer might offer. They sometimes are not built on the same actuarial principles as private insurance company would build them. And as a consequence, it’s problematic. It’s often not good coverage.