Utmost Good Faith Binding Between Insured And Insurer Part III. How did the insured make use of the loophole of the Utmost Good Faith?
I eager to prove my capacity to earn the non-motor insurance profit commission besides the normal agent commission during my first year begin as an agent/broker after I quitted my full-time job in a general insurance company after passing the Chartered Insurance Institute (UK) with marine insurance major.
I combed every inch of the industrial estate regardless the size of the factory. During the hot and sultry dried climate in the equatorial zone. I walked into a cafe to quench my thirst.
” Are you an insurance agent? An elder man approaching me.
” Yes, how can I help you sir.,” I politely replied him.
After the normal exchange card, he invited me to his office nearby to discuss Good In Transit policy. The first year, everything went on smoothly. During the second year, He introduced his son to me as he is planning to retire soon, spending more quality time with two grandsons.
His son- a middle man dressing like a school teacher, well groom and decently formal dressing. Mr. Christ has vast experience in logistic working in mainland China and a short stint in United State. When he took over his father business, my nightmare to begin. 1st year, there was four genuine minor claims wich was duly honored and full settlement by the insurer.
Upon renewal, I reevaluation the risk and adjust the premium accordingly. During the duration, they were 2 minor claims within 2 months, followed by 2 major claims one week after another consecutively.
As I was away handling another claim, after finish my job, I paid him a cordially visited him on my way home.
“Mr. Christ, very lucky you have the GIT insurance to cover the claim.”
” Mr. since I bought the insurance from you, I have the ri….ght to claim.Am I right? He said with a sure to claim tone.
” Obsoletely sure, you have the right.”
I recorded our conversation and passed it to my friend Dr. Robby who was then a prominent psychiatrist. His analysis it as Mr.Christ has a high moral hazard.
I personally investigate the claim, read every wording of the submitted documents. Thus, the four claims were delaying for some time. Mr. Christ blew up of his anger, he hired one lawyer to file the claim, another more veteran and prominent one followed suit.
The insurer called me up to meet the 2 hired lawyers with the presence of the insured in the insurance office.
“The last claim more than RM400,000 of consignment, the contract is ex-work, the buyer is from oversea, does your client .i.e the transporter has any insurable interest on the good? I questioned the well-prepared lawyers.
” No” they replied me.
Another 3 lorries that make the claim were not with the contract of affreightment signed up with the transporter. The outsiders’ lorries were not in the subcontract list payroll. The insured had abused the weakness on the annual carrying. Besides, anyone lorries with a genuine claim can forward to him, of which he took a lion share of the claim money.
The insured had a high moral hazard on the fraud claim.
Finally, The insurer discharged all their liability from the renewal date, and fully refund the paid premium to the transporter.
Utmost good faith has a bigger role binding the insurer, more in the next episode.
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