Tan Hung Hoong v Allianz Life Insurance Malaysia Berhad (WA-22NCC-481-07/2024)

TAN HUNG HOONG

SIEW HUEY YI (NO K/P: 760426-08-5710) …PLAINTIF-PLAINTIF DAN ALLIANZ LIFE INSURANCE MALAYSIA BERHAD (NO SYARIKAT: 198301008983 (104248-X)) …DEFENDAN

The Plaintiffs are husband and wife. The 1st Plaintiff (“P1”), the husband of the 2nd Plaintiff (“P2”), purchased life and medical insurance coverage for P2 from the Defendant. P2 was diagnosed with cancer and was denied coverage by the Defendant when P2 was hospitalized for cancer treatment. The Defendant declined to issue the guarantee letter to the hospital and decided to investigate.

P1 and P2 cooperated in supplying the Defendant with P2’s medical history and upon review of the same, the Defendant found cause to load the premium and exclude coverage for certain conditions from the policy riders. P1 and P2 did not accept the revisions, following which the Defendant voided the Riders ab initio on grounds of fraudulent misrepresentation.

P1 and P2 commenced this action seeking, inter alia, reinstatement of the Riders, payment of RM100,000 in critical illness benefits, approval of medical claims relating to cancer treatment costs, and general damages.

In August 2021, an agent of the Defendant submitted an insurance application dated 18-8-2021 after assisting P1 and P2 to fill out the online form (“Proposal Form”). By all accounts, it was unclear whether P1 and P2 were given the completed form to review before it was submitted. The following were the answers given to specific questions about P2’s health and medical history: a) Question no. 76(n): whether she has suffered from or been told that she has or received treatment for “Anaemia, thalassemia, abnormal platelet count, Systemic Lupus Erythematous (SLE), Rheumatoid Arthritis or any disease of the blood or autoimmune disease”. Plaintiffs answered “No” b) Question no. 80(b): whether she had ever been investigated, treated, or been advised to seek medical treatment, or been under observation or required regular follow up for “fibroids, ovarian cysts, endometriosis, cervicitis, menstrual disorder, Polycystic Ovarian Disease (POD) or any disease or disorder of the breast or female organs or any complications during pregnancy and/or at childbirth”. Plaintiffs answered “No”. c) Question no. 75(a): whether she has suffered from or been told that she has or received treatment for “Fits, epilepsy, fainting spells, paralysis, Multiple Sclerosis, Alzheimer’s disease, Parkinson’s disease, dementia, cerebral palsy, stroke, Transient Ischemic Attack (TIA) or other disease or disorder of the brain or nervous system”. Plaintiffs answered “No”. d) Question no. 69: whether either her “father, mother, brother or sister suffered from heart disease, stroke, hypertension, polycystic kidney disease, diabetes mellitus, cancer, including carcinoma-in-situ, paralysis, Multiple Sclerosis, Alzheimer’s, Parkinson’s and Huntington’s disease, motor neuron disease or any other inherited/genetic diseases”. Plaintiffs answered “Yes”. e) Question 82: [if answered “Yes” to any of the questions 64 to 70 …provide full details including exact diagnosis, underlying cause, onset of the condition, type of treatment of follow up, name and address of attending doctor, current condition, any other information and please submit medical report if any] Plaintiffs answered: 69. Mother - Diagnose – 2013 / UM / Forget the doctor name / colorectal cancer; Father – Nose cancer 35 years ago.

On 27-8-2021, the Defendant issued the PowerLink life insurance for the life of P2 in the sum of RM100,000 under policy numbered 0109985212 (“Policy”) with 3 riders: a) PayorCover b) HealthCover c) Medisafe Infinite + Hospitalisation and Surgical Insurance (collectively, “Riders”)

On 21-6-2023, P2 was diagnosed with Endometrioid Adenocarcinoma Grade 2 and Leiomyoma. The former is a form of uterine (endometrial) cancer, while leiomyoma is a benign tumour of the uterus commonly referred to as a fibroid.

In June 2023, the Defendant received a request for a guarantee letter from UM Specialist Centre for the hospitalisation of P2 for uterine sarcoma, which the Defendant declined to issue pending investigation. On 20-6-2023, the Defendant received an appeal dated 7-6-2023 in respect of the rejection. Several medical reports were submitted to the Defendant together with the appeal.

In response to the appeal, the Defendant issued letters dated 31- 7-2023 and 5-9-2023 to P1 requesting further information so that the Defendant could properly assess P1’s claim. While considering the documents submitted by the Plaintiffs, the Defendant discovered the following: Family Medical History a) P2’s mother had been diagnosed with uterine cancer in 2006; b) P2’s sister had been diagnosed with ovarian cancer in September 2015 P2’s Medical History c) P2 had been diagnosed with mild anaemia in July 2019; d) P2 had been diagnosed with 2 small benign uterine fibroids in July 2019; and e) P2 had been diagnosed with trigeminal neuralgia in 2019.

On 25-10-2023, the Defendant reviewed the Policy and proposed revisions to several terms and conditions of the Riders with retrospective effect from the inception of the Policy on 27-8-2021:

A loading + 50% Extra Mortality on the Medisafe Infinite + (Base Plan) Plan 200 Rider Supplementary Contract

No compensation under the Medisafe Infinite + (Base Plan) Plan 200 Rider Supplementary Contract for operations, diagnostic tests or medical treatment on any disease or disorder directly or indirectly related to uterine fibroid(s), anaemia, fifth cranial nerve and any complications arising therefrom;

No coverage under Total and Permanent Disability Benefit (TPD) Supplementary Contract for any disability directly or associated/related to fifth cranial nerve and any complications arising therefrom;

No compensation under PayCover (UPCR) and HealthCover (UHCR) Riders Supplementary Contract for any disability directly or indirectly associated or related to cancer and any complications arising therefrom.

The Plaintiffs submitted an appeal dated 27-10-2023 to the Defendant in respect of the terms and conditions offered by the Defendant. Among other things, the Plaintiffs explained that P2’s fibroids detected in 2019 were benign, and that P2’s anaemia was mild. The Defendant responded to the Plaintiffs’ appeal through its letter dated 23-11-2023 and informed P1 that the Defendant was unable to accede to the Plaintiffs’ appeal.

Apparently uncertain as to the scope of the exclusions in relation to P2’s cancer diagnosis, the Plaintiffs then submitted another appeal dated 24-11-2023 to the Defendant requesting clarification on the proposed terms and conditions. The Defendant responded to the Plaintiffs on 26-12-2023 with investigation findings, and reiterated the revised terms and conditions of the Policy and Riders after reassessment.

The Plaintiffs submitted further questions for clarification on 10-1- 2024, particularly on the cancer exclusion clause in the revised terms and conditions. On 8-2-2024, the Defendant responded to the Plaintiffs’ appeal and explained that the proposed terms and conditions were in light of P2’s medical history before the application for the Policy and Riders.

On 14-11-2023, the Plaintiffs then submitted a Critical Illness claim under the Riders for P2’s diagnosis of endometrial adenocarcinoma. However, the Defendant informed P1 that it could not process the critical illness claim because it had not received P1’s acceptance of the proposed revised terms and conditions, together with the Critical Illness claim form dated 7-2- 2024 enclosing P2’s medical reports.

As P1 did not accept the Defendant’s proposed revised terms and conditions, the Defendant then voided the Riders from inception on 20-8-2024. Analysis and findings

In relation to insurance contracts, the law on pre-contractual misrepresentations is codified in section 129 and Schedule 9 of the Financial Services Act, 2013 (“FSA”). Part 2 in Schedule 9 of the FSA sets out the obligations and standards relating to pre-contractual disclosure representations, and Part 3 sets out the remedies for misrepresentations.

Paragraph 5(2) of Schedule 9 makes it the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer when answering “any specific questions that are relevant to the decision of the insurer whether to accept the risk or not and the rates and terms to be applied.” Paragraph 6 sets out the relevant circumstances to determine whether reasonable care has been taken and includes, inter alia, “(a) the consumer insurance contract in question and the manner in which the contract was sold to the consumer;

any relevant explanatory material or publicity produced or authorized by the licensed insurer; and (c) how clear and specific, the licensed insurer's questions were.”

In this case, there is no doubt that the Proposal Form contained non-disclosures. Paragraph 7(8) of Schedule 9 goes on to provide that: “(8) Unless the contrary is shown, it is to be presumed that the consumer knew that a matter about which the licensed insurer asked a clear and specific question was relevant to the insurer.”

Thus, although the preceding sub-paragraph 7(7) of Schedule 9 places the burden on the insurer to prove the misrepresentation on a balance of probabilities, paragraph 7(8) gives it the benefit of a presumption that the insured knew that a matter about which the insurer asked a clear and specific question was relevant to the insurer.

The questions in the proposal form which were wrongly answered by P1 and P2 were relevant to the underwriters. No expert or industry evidence was adduced by the Plaintiffs to the contrary. The Defendant therefore succeeded in proving, on a balance of probabilities, that there were material non-disclosures in the Proposal Form.

However, the Plaintiffs’ state of mind at the time is the decisive issue as the Defendant claims fraud. The Policy and Riders had been in force for a period of more than 2 years when the Defendant repudiated the Riders. Paragraph 13(2) of Schedule 9 to the Financial Services Act 2013 applies and it provides as follows: “13. Non-contestability for life insurance contracts

Where a contract of life insurance has been in effect for a period of more than two years during the lifetime of the insured, such a contract shall not be avoided by a licensed life insurer on the ground that a statement made or omitted to be made in the proposal for insurance or in a report of a doctor, referee, or any other person, or in a document leading to the issue of the life policy, was inaccurate or false or misleading unless the insurer shows that the statement was on a material matter or suppressed a material fact and that it was fraudulently made or omitted to be made by the policy owner or the insured.” [Emphasis added]

“Fraud" is defined in section 17 of the Contracts Act 1950 as including the following acts done with intent to deceive or induce another to enter into a contract: “

the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;

the active concealment of a fact by one having knowledge or belief of the fact;

a promise made without any intention of performing it;

any other act fitted to deceive; and

any such act or omission as the law specially declares to be fraudulent. Explanation - Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.”

In the context of the FSA, the statutory standard for fraudulent misrepresentation is a deliberate or reckless one. For contracts of insurance that have been in effect for less than 2 years, which was the case when the request for the guarantee letter was made, paragraphs 15 and 16 of Schedule 9 differentiate the remedy by reference to whether a misrepresentation is deliberate or reckless (the insurer may avoid the contract and refuse all claims) or careless or innocent (the insurer has other remedies) as follows: “15. Remedies for deliberate or reckless misrepresentation If a misrepresentation was deliberate or reckless, a licensed insurer may avoid the consumer insurance contract and refuse all claims.

Remedies for careless or innocent misrepresentation

If a misrepresentation was careless or innocent, the licensed insurer's remedies shall be based on what it would have done if the consumer had complied with the duty set out in paragraph 5 and subparagraphs (2) to (4) are to be read accordingly.

If the licensed insurer would not have entered into or renewed the consumer insurance contract on any terms, the insurer may avoid the contract and refuse all claims, but shall return to the consumer any premium paid by him.

If the licensed insurer would have entered into or renewed the consumer insurance contract, but on different terms excluding terms relating to the premium, the contract is to be treated as if it had been entered into or renewed on those different terms if the insurer so requires.

In addition, if the licensed insurer would have entered into or renewed the consumer insurance contract, whether the terms relating to matters other than the premium would have been the same or different, but would have charged a higher premium, the insurer may reduce proportionately the amount to be paid on a claim as may be specified by the Bank.”

Paragraph 7 of Schedule 9 defines what is classified as deliberate or reckless, careless or innocent misrepresentations as follows: “(4) A misrepresentation is deliberate or reckless if the consumer knew that-

it was untrue or misleading, or did not care whether or not it was untrue or misleading; and

the matter to which the misrepresentation related was relevant to the licensed insurer, or did not care whether or not it was relevant to the insurer.

A misrepresentation made dishonestly is to be regarded as having been made deliberately or recklessly.

A misrepresentation is careless or innocent, as the case may be, if it is not deliberate or reckless.”

In this case, the burden was on the Defendant to prove that the Plaintiffs possessed the requisite fraudulent state of mind i.e. that they knew the information contained in the Proposal Form was untrue or misleading, or did not care whether s not the statements were untrue or misleading. On this, this Court considered the participation of the Defendant’s agent and the evidence of how the Proposal Form was completed and submitted to make the following findings: a) The Plaintiffs neither personally completed nor signed the electronic Proposal Form; rather it was completed entirely by the Defendant’s agent and submitted electronically b) The Defendant’s agent did not ask the Plaintiffs the specific questions in the Proposal Form and was himself unaware that P2 had anaemia, fibroids or trigeminal neuralgia c) In accordance with his usual practice, the Defendant’s agent broadly asked the Plaintiffs whether there was anything to declare d) The Plaintiffs informed the Defendant’s agent of the cancer diagnoses affecting P2’s parents, but were not specifically asked specifically about other family members e) The Plaintiffs informed the Defendant’s agent about P2’s neck and facial pain, but the Defendant’s agent was unfamiliar with the condition and how to it ought to be reflected in the Proposal Form.

Considering the manner in which the Policy and Riders were sold to them, the Plaintiffs probably did not review, or did not carefully review, the completed Proposal Form. On the evidence therefore, this Court finds that the Plaintiffs did not fully appreciate the nature and extent of their disclosure obligations in completing and submitting the Proposal Form. Instead, they appeared to have substantially relied on the Defendant’s agent.

Based on the testimony of the witnesses, there was no evidence that the Plaintiffs were specifically cautioned regarding the importance of complete disclosure. The Defendant’s agent admitted that he did not go through each question in the Proposal Form and candidly accepted that he had failed to properly discharge his responsibilities in ensuring that the requisite disclosures were made.

Ultimately, apart from the omissions in the Proposal Form itself, there was no conduct attributable to the Plaintiffs, nor any surrounding circumstantial evidence, from which this Court could infer that the Plaintiffs knowingly withheld material information or appreciated the implications of the omissions.

This Court therefore finds that the Plaintiffs were merely careless and insufficiently attentive to the seriousness of the disclosure process. Put another way, this Court is unable to conclude that the Plaintiffs acted fraudulently, deliberately or recklessly when providing information to the Defendant’s agent for the completion of the Proposal Form.

Further, this Court notes that paragraph 16 of Schedule 9 expressly provides that in the event of careless or innocent misrepresentations, the Defendant’s remedy for contracts in effect for less than 2 years, shall be based on what it would have done if the Plaintiffs had complied with their duty. As noted, the Defendant did in fact propose a revision of the policy and by its own conduct, also did not see it fit to immediately repudiate it for fraudulent misrepresentation.

In respect of the variation to the Policy, the communications were badly handled. The Defendant ought to have been upfront when asked, whether P2’s cancer treatment was covered by the revised Riders, instead of being vague and unhelpful in the circumstances. In all the communications, there was no direct answer or any attempt to answer P1’s direct question on this point.

After reviewing the evidence and written submissions, and considering the facts and law, the Plaintiffs’ claims are allowed in part and the Defendant is ordered to:

reinstate the Policy to its original terms without the reviewed and/or exclusion clauses

pay RM100,000.00 to the Plaintiffs as compensation for critical illness under the Policy

approve and pay all cancer treatment costs claimed by the Plaintiffs under the Policy

pay post-Judgment interest on the RM100,000.00 critical illness compensation at 8% per annum from the date of this Judgment until full payment; and

pay costs of RM15,000.00, the quantum being commensurate with what should have been a claim filed by the Plaintiffs in the Sessions Court.

In relation to the Plaintiffs’ claim for general damages, the only particulars pleaded concerned emotional pain and suffering. As the claim arises purely in contract, such non-pecuniary losses are not recoverable. Bertarikh: 15 Mei 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Ng Kian Nam (Chua Yee Siong, R Mehgalaa dan Nur Atiqah bersamanya) Tetuan Ng Kian Nam & Partners Untuk Defendan: Harish Nair (Emeline Khoo dan Ashley Yip (PDK) bersamanya) TetuanJuen, Jeat, Nic & Nair