CLAIMS

CLAIMS

To ascertain:

 Valid policy
 Limitation - time
 Covered risk
 Claimant
 Proximate cause
 Exclusion clause

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 Procedure for claims

 Notice of claim – whether a pre-condition

 P & O Insurance v. Kathirvelu
 application of the contra proferentum rule

BN Guidelines on Claims Settlement Practices

identified repudiation of liability on grounds of
late notification of claims as one of the
unsatisfactory practices of insurers.

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BN G/L on Claims Settlement Practices

General & composite insurers

minimum standards

prompt & fair settlement

 BN G/L on Claims Settlement
Practices

General & composite insurers

Sets minimum standards
Insurers should have as their basic
goal – the prompt & fair settlement
of all claims
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 BN G/L on Claims Settlement
Practices
No denial of claim on:
Failure to give written notice of loss within
specified time limit

Technical breaches of warranty or

conditions which are not material or
unconnected to the circumstances of the
loss, unless fraud
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 Limitation period

Limitation of time for submitting a

claim
 section 6(1)(a), Limitation Act
1953
 section 29, Contracts Act 1950

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NZ Insurance Co Ltd v. Ong Choon Lin (trading
as Syarikat Federal Motor Trading)

FC –“ In no case whatever shall the

company be liable for any loss or damage
after the expiration of 12 months from the
happening of the loss or damage unless the
claim is the subject of pending action or
arbitration”
the clause is void as it is contrary to
section 29 of Contracts Act 1950.
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 Who can claim?

 Part XIII, Insurance Act 1996 – payment

of policy moneys under a life policy or
personal accident policy

 section 2, Insurance Act 1996: Policy

owner means the person who has
legal title to a policy

Cf section 130, Schedule 10, FSA

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Schedule 10 FSA – payment of policy
moneys
Sch.
Life Policy & PA
prevails

Nomination 13 para

Assignmt Payment
 PAYMENT OF POLICY
MONEYS –LIFE & PA

 Part XIII, Insurance Act 1996

 Section 172 - this Part to prevail over policy and any other written law
or in any rule of law, practice or custom in relation to these matters.

 Schedule 10, FSA 2013

 Paragraph 13 – Sch. Prevails over policy & other written law
 Paragraph 11 – once payment made, it is up to the claimant how to
use the policy moneys.

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 PAYMENT OF POLICY
MONEYS –LIFE & PA

 Part XIII, Insurance Act 1996

 Section 172 - this Part to prevail over policy and any other written law
or in any rule of law, practice or custom in relation to these matters.

 Schedule 10, FSA 2013

 Paragraph 13 – Sch. Prevails over policy & other written law

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 Policy owner
 section 2, Insurance Act 1996: Policy owner
means the person who has legal title to a policy
and includes –
a)Where the policy has been assigned, the
assignee;
b)The personal representative of a deceased
policy owner, where such personal
representative is entitled as against the insurer
to the benefit of a policy;

Cf section 2, FSA

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 Policy owner

c) In relation to a policy providing for the payment of annuity, an

annuitant; and
d) Where under a policy, moneys are due or payable, whether
periodically or otherwise, the person to whom the moneys are due or
payable

 = section 2 FSA 2013

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 Cases : Who can claim?

Anuar bin Ismail v. Tan Sri Tan Chin

Tuan & Anor
BBMB v. Mohamed Salleh
Poominathan a/l Kuppusamy

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 Principles applicable - claims

Utmost good faith – non-

disclosure/ misrepresentation
Indemnity
Proximate cause

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 Good
faith

Double ins.
& Indemnity
contribution

CLAIMS

Proximate
Subrogation
cause

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 PRINCIPLE OF
INDEMNITY

Applicable to indemnity
policies [exception – life & PA
policies]
Concept
Castellian v Preston
 Castellian v Preston
 Brett LJ:
The very foundation… of every rule which
has been applied to insurance law is this,
namely, that the contract of insurance
contained in a marine or fire policy is a
contract of indemnity, and of indemnity
only…in the case of a loss against which
the policy has been made, [the assured]
shall be fully indemnified, but shall never
be more than fully indemnified. That is the
fundamental principle of insurance…

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 To prove actual loss

 No real loss if no interest in the subject

matter
 Sadlers’ Co. v Badcock
fire policy on house by leasee. Lease
expired but policy still valid. Fire. Policy
assigned to landlord. Whether
landlord could claim?
Ct – no real interest after lease expired.
Nothing to assign.
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 Measure of indemnity

 Excess clause
 Market value
 Commercial worth – price a willing buyer prepared to
pay for the item
 Cost of reinstatement/ replacement
 Deduction for betterment
 Cost of repair
 Double insurance

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 Fraudulent claims

 In submitting claims under the policy, the claimant

must do so in good faith. The claim must not be in
excess of the actual loss b’cos the principle of
indemnity applies to indemnity policies.
 A fraudulent claim can be rejected on the basis that
the claimant has breached utmost good faith.

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 Fraudulent claims

 Whether or not a claim is fraudulent is a question of

fact.
 Factors that are relevant include excessive claims,
claims history, financial status of insured at the time
the risk occurred.

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 Fraudulent claims

Section 17, Contracts Act 1950 –

definition of “fraud”
Burden of proving – section 103,
Evidence Act 1950

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 Cases

 Teh Say Cheng v. North British &

Mercantile Insurance
 The Star Sea
 Orakpo v. Barclays Insurance Services
 Ong Choon Lin … v. NZ Insurance Co
 Wong Cheong Kong Sdn Bhd v.
Prudential Assurance Sdn Bhd
 Asean Securities Paper Mills Sdn Bhd v
CGU Insurance Bhd [2007] 2 MLJ 301

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Asean Securities Paper Mills Sdn Bhd v
CGU Insurance Bhd [2007] 2 MLJ 301

JV –
co.
Fire ins
warehouse in Kg Acheh, 11.9.89
RM32.43
Sitiawan - storage 1m – fire

Condition
13 –
Claimed
RM16,124,
purchase and sale of
fraudulent
claim
500
rejected -
various categories of
arson papers
Asean Securities Paper Mills Sdn Bhd v
CGU Insurance Bhd – J1

Insurer - deliberate acts of arson

instigated by Balasingham, a
shareholder/director

HC – finding for the insured

Court of Appeal
[2006] 3 MLJ 1

reversed the judgment

Decision for insurer

Federal Court
whether appellate court can totally
disregard the evidence and findings
of two experts?

evidence and findings - 'spontaneous

combustion'

whether it is competent for the Court of Appeal to

rely on circumstantial evidence as
opposed to the direct and scientific evidence in
reversing a decision of a trial court?
Federal Court allowed appeal by the
insured
The Court of Appeal had totally
disregarded the evidence of
the experts

Insurer failed to prove allegation of

fraud - arson

Std of proof on fraud in a civil

proceedings - beyond reasonable
doubt – reversed by later case*
Federal Court

“Suspicion, however great, is

insufficient to prove fraud which
needs to be proved
beyond any reasonable doubt”
Sinnaiyah & Sons Sdn Bhd v Damai
Setia Sdn Bhd [2015] 5 MLJ 1- FC

At law there were only two standards of proof, namely,

beyond reasonable doubt for criminal cases and on
the balance of probabilities for civil cases.

As such, even if fraud was the subject in a civil claim,

the standard of proof was on the balance of
probabilities.
Whether fraudulent claim – Q of fact

Hong Leong MSIG Takaful Bhd (previously known

as Hong
Leong Tokio Marine Takaful Bhd) v Shantawood
Manufacturing Sdn Bhd [2016] 6 MLJ 32

Metro Gain Sdn Bhd v Commerce Assurance

Bhd [2012] 9 MLJ 682
 Basis of claims

Market value
Cost of repair
Cost of replacement/
reinstatement
Agreed value
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 Market value

P & O Insurance Co v. Wong

Shee Min [1980] 1 MLJ 291
Leppard v. Excess Insurance
Richard Aubrey Film
Productions Ltd v. Graham

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 “New for old”

Betterment
Chip Fong (KL) Sdn Bhd v.
Guardian Royal Exchange
Assurance [1991] 3 CLJ 2855

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 Factors to be considered in
claims

Sum insured, actual loss &

indemnity
Excess clause
Average clause
Betterment
Others
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 Other claims-related matters

Subrogation
Double insurance & contribution

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