The Insurer and Agent not following the Duty of Disclosure

The insurer and agent not following the duty of disclosure. In all the insurance industry, there is a rule that the applicant must the sign in the applicant dotted line before the agent can submit the proposal form to the company.

In the life insurance industry, in order to fulfill the quote or qualify for the company incentive oversea trip, the agent will be very darling to alternative or add any extra rider to earn more commission or quota purpose.

A lady’s voice called me once day.

” Are you Mr. Jamin?” she inquired me.

” Yes, Miss, how can I help you?” I asked her.

” So, you are the modern Justice Bao in the insurance industry, Can you do me a favor?”

” Thanks for the compliment, but I am not a Justice Bao, I do what I can, what are all about?

“It is concerned about my life insurance that I bought from an agent almost 2 years ago. Can we make an appointment next week?  Is that convenience to you?”

“Ok. It fine with me.”

She showed me all the relevant documents.  She wanted to cancel the life policy with half yearly term payment and seeking for the full refund of premium.

At first, I was reluctant to help as the life insurance was not my cup of tea. I specialize in general Marine Insurance. After seeing her persistent to get full premium with the help of a few of her life insurance agents and also a few appeal letters to the Bank Negara, to no avail.

“What did your agent say to you?” I asked her.

“The insurance company will only willing to settle for amount up from the range of RM22k to RM24K”

“Why like that? It was a bargain game to me.” I replied.

“The insurer needed to deduct all the agent’s and up line commission then the balance would refund to me.”

“Why you want to cancel this policy?

“It was not an honest dealing, I did not want any hospital benefit in the policy.

I carefully scan through the proposal form, I noticed there was an alternation.

I wrote a letter on her behalf to the Bank Negara Customer Services Bureau on 23-9-2005. On October 2005, the concerned authority wrote a letter to the insurance company giving 14 days to reply to the complaint letter.

On 8th December 2005, she received two cheques one for RM33 750 being full premium refund and another Rm2 700 being 8% interest charge respectively.


Your duty of disclosure: Before you enter a contract of general insurance with an Insurer, you have a duty, under the Insurance Contracts Act 1996 to disclose to the Insurer every matter that you know or could reasonably be expected to know, is relevant to the Insurers’ decision whether to accept the risk of insurance and if so, on what terms.  You have the same duty to disclose these matters to the Insurer before you renew, extend, vary or reinstate a contract of general insurance.

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The Insurer and Agent not following the Duty of Disclosure 1



10 replies to “The Insurer and Agent not following the Duty of Disclosure”

  1. Interesting read. I have a background in life insurance in my own country. I am sorry to hear that this happened and it is unfortunate that things like this do happen. I hope you had also done your fudiciary duty to report this to your insurance licensing committee about this particular agent. Although this is duty is typically universal throughout the insurance industry, you may want to specify country of origin. I can say that if I had come across a policy set up this way, I would have been reporting this to my insurance council right away.

    1. Thanks for reading this article and giving the valuable comment. In fact, the insured get the full premium refund plus the delay in interest as a compound. what happen to the agent is of no interest to me.

  2. Thanks for the information. I had no idea you had to worry about what a agent might do out of greed. Thanks.

    1. thanks for reading my article and giving me the valuable comment.
      You need to check the detail policy one it was delivery to you. If you find the policy not up to your satisfaction, like any alternation additional rider.Inform the agent and the insurer in black and white or cancel the policy and return the policy to the insurance company personally within 14 days.

  3. So, what happened if the insured person did not disclose every thing? Every risks? I think it seems like a common thing for people to not tell every single details.


    1. Thanks for reading my article and giving the valuable comment.
      Yes, you need to declare like for instance you are a hypertensive in the proposal form. Otherwise, you are in hot soup during any claim especially the medical insurance.

  4. Still being wet behind the ears so to say this is very useful, most people my age,23, and sometimes older don’t understand to double check before signing anything and check again because everyone is naive to some extent, especially with insurance because everyone needs that.

    1. Thanks for reading my article and giving me the valuable comment.
      One needs to extra careful dealing with insurance. Make sure u photostat a copy of the proposal and comparing with the actual policy jacket when delivery.

  5. Hi Jamin, i enjoyed reading this story and sad at the same time to what happened to her, i think it is a must to read any paper given to us before signing but still there might be some things that only someone with some expertise can explain to us,looking forward to see more advices like this from you.

    1. Thanks for reading my article and giving valuable comment. It is wise to scan through the policy jacket thoroughly before singing back the acknowledge copy to the insurer. If any doubt please contact the agent or the insurer for any clarification.

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