1. INTRODUCTION
1.1. Section 8 of the Financial Service Act
1.1.1. Do not carry on any authorized business unless,
1.1.2. a) Licensed by the Minister of Finance, under Section 10 to carry on banking business, insurance business/ investment banking business
1.1.3. b) Approved by the Bank under section 11 to carry on any businesses set out in Division 1 of Part 1 of Schedule 1.
1.2. Minister of Finance & Bank Negara Malaysia responsible for license authorizing the holder.
1.3. Section 20 of Financial Services Act 2013 sets out the circumstances by Minister & Bank Negara revoke the licensed.
1.4. Contract where one person, "the insurer" undertakes to indemnify another "the insured".
2. PREMIUM OF INSURANCE
2.1. The insured promises to pay to the insurer a sum of money in consideration.
2.2. Section 2(1) of Financial Services Act 2013
2.2.1. 'Premium'-the amount payable to an insurer under a policy as consideration for the obligations assumed by the insurer.
2.3. A lump sum/ periodic payments
3. POLICY OF INSURANCE
3.1. The contract which outlines what the insurance company will pay in case of loss
3.2. Section 2(1) of Financial Act 2013
3.2.1. Policy- An insurance policy includes cover note/ contract of insurance, whether or not embodied in or evidenced by an instrument in the form of an insurance policy, and references to;
3.2.2. a) Issuing a policy shall be constructed as entering into a contract of insurance, whether/ not a formal contract has been issued
3.2.3. b) A policy of an insurer that liability transferred to the insurer from other insurer.
4. INSURABLE INTEREST IN LIFE POLICY
4.1. Section 128 of Financial Services Act
4.1.1. Person shall be deemed to have insurable interest in relation to another person if the other person is
4.1.1.1. spouse
4.1.1.2. ward under the age of majority at the time the insurance is effected
4.1.1.3. employee
4.1.1.4. person on whom he is wholly/ partly dependent for maintenance/ education at the time the insurance is effected.
5. MATERIAL FACT
5.1. Section 129 (4)(1) of Financial Service Act
5.1.1. Before a contract of insurance is entered into, varied or renewed, proposer shall disclose to the licensed insurer a matter that
5.1.2. a) he knows to be relevant to the decision of the insurer on whether to accept the risk / not and the rates and terms to be applied
5.1.3. A reasonable person in the circumstances could be expected to know to be relevant.
5.2. Section 129(4)(2) of Financial Services Act
5.2.1. The duty of disclosure shall not require the disclosure of a matter that
5.2.1.1. a)diminishes the risk to the licensed insurer
5.2.1.2. b) common knowledge
5.2.1.3. c) licensed insurer knows / in the ordinary course of his business ought to know
5.2.1.4. d) in respect of which the licensed insurer has waived any requirement for disclosure.
5.3. Case: New India Asurance Co Ltd v Pang Piang Chong & Anor (1971)
5.4. Case: Abu Bakar v Oriental Fire & General Insurance Co Ltd (1974)
6. EXEMPTION CLAUSE
6.1. common for insurance contracts to contain exemption clauses to be exempted/ excluded from some liability.
6.2. case: Tan Keng Hong & Anor v Fatimah binti Abdullah (1974)
7. COMPLETION OF PROPOSAL FORM BY AGENT
7.1. anyone who wishes to effect an insurance would be required to fill up the proposal form himself.
7.2. proposal form is the basis of a contact
7.3. insurer may avoid liability if there is any inaccurate statement.
7.4. Important to know who fills up the form
7.5. Agent of insurance company who completing form for proposer is acting as his agent and not on behalf of the company.
7.6. case: Ong Eng Chai v China Insurance Co Ltd (1974)
8. COMMON EXAMPLES OF INSURANCE
8.1. Life insurance
8.2. Marine insurance
8.3. Fire insurance
8.4. Accident insurance
8.5. Motor insurance
8.6. Aviation insurance
9. FINANCIAL SERVICE ACT 2013
9.1. Section 5
9.1.1. Insurance Business
9.1.1.1. 1) Life Business
9.1.1.1.1. Upon untimely death of its policy holder, the insured, a financial intermediary as the insurer, shares the financial risk.
9.1.1.2. 2) General Business
9.1.1.2.1. Insurance contracts that do not come under the ambit of life insurance are called general insurance. The different forms of general insurance are fire, marine, motor, accident, and other miscellaneous non-life insurance.
9.2. Effective in 30th June 2013
10. TWO TYPES OF INSURANCE
10.1. Contingency insurance
10.1.1. Involves payment on a continent event & in which the sum paid is not measured by the loss but stated in the policy.
10.1.2. Insurer's liability is to pay certain fixed sums specified in the policy, death, accident/sickness of the insured.
10.1.3. Life policy: Insurer undertakes to pay a certain sum of money on the death of a specified person/ on his attaining a ertain age.
10.2. Indemnity insurance
10.2.1. Indemnity against loss in which the measure of loss is the measure of payment.
10.2.2. Binds the insurer to pay the amount of the insured's actual loss up to the amount covered by the insurance policy.
10.2.3. If the risk does not occur, then no payment is made.
10.2.4. Fire policy: Liability of insurer is only to reimburse the insured for the loss he has suffered during the event and no more.
11. INSURANCE A SPECIAL CONTRACT
11.1. Must be an 'insurable interest' to be insured
11.2. Proponent is required to demonstrate utmost good faith (uberrimae fidei) in insurance proposal
12. INSURABLE INTEREST
12.1. the insured have to have an 'insurable interest'
12.2. defined as an interest in the subject matter of a contract of insurance which provides the insured with the right to enforce the conract
12.3. section 128 of Financial Service Act
12.3.1. Policy is void if a person has no insurable interest in the policy.
12.4. A person who suffer loss in the event of his property being destroyed can be said to have an insurable interest.
12.5. Life insurance
12.5.1. Insurable interest at the time the insurance was taken
12.6. General insurance
12.6.1. Insurable interest t the time the insurance was taken and at time of a claim
12.7. Case: Macaura v Northern Assurance Co Ltd (1925)
12.8. Case: Nanyang Insurance Co Ltd v Salbiah & Anor (1967)
13. UBERRIMAE FIDEI/ UTMOST GOOD FAITH
13.1. Insurance contracts are utmost good faith (uberrimae fidei)
13.2. applicable to describe a class of contracts in which one party has a preliminary duty to disclose material facts.
13.3. Contracting parties are required to disclose all information which would influence either party's decision to enter into the contract, regardless of whether such info was requested/ not.
13.4. Insurance contracts are based on mutual trust & confidence between the insured and insurer.
14. MATERIAL FACTS/ INFORMATION
14.1. Section 129 of Financial Services Act 2013
14.1.1. "material fact" means matter / which, if known by the licensed life insurer
14.1.2. would have led to its refusal to issue a life policy to the policy owner
14.1.3. would have let to impose terms less favorable to the policy owner than those imposed in the life policy.