The principle of uberrimae fide requires full disclosure of material facts in insurance contracts, and non-disclosure that impacts risk assessment is sufficient for an insurer to repudiate a policy.

Ong Chee Kwan JC:

[1] This action has to do with the principle of uberrimae fide in a contract of insurance. The principle is trite. The duty has been described by the Court of Appeal in Leong Kum Whay v. QBE Insurance (M) Sdn Bhd & Ors, 2005 MarsdenLR 2071 as follows:

'It is settled beyond dispute that a contract of insurance is one that imposes mutual duty on the parties to it to act uberrimae fides towards each other. On the part of the insured, he or she must make full and frank disclosure of all material facts. It is not for him or her to decide in his or her own mind what is material... The duty is on the insured to make full disclosure of material facts within his knowledge.'

[2] The duty of disclosure has been codified in Malaysia in the Financial Services Act , 2013 (" FSA ") which lays down the duty of disclosure for all insurance contracts. More specifically, s 129 of the , which came into operation since 1 January 2015, provides that:

"Schedule 9 sets out the pre-contractual duty of disclosure and representations for contracts of insurance in Part 2, and the remedies for misrepresentations relating to contracts of insurance in Part 3".

[3]Schedule 9 of the FSA provides:

"5 (1) Before a consumer insurance contract is entered into or varied, a licensed insurer may request a proposer who is a consumer to answer 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.

(2) It is the duty of the consumer to take reasonable care not to make a misrepresentation to the licensed insurer when answering any questions under subparagraph (1).

(7) A licensed insurer shall, before a consumer insurance contract is entered into, varied or renewed, clearly inform the consumer in writing of the consumer's pre-contractual duty of disclosure under this paragraph, and that this duty of disclosure shall continue until the time the contract is entered into, varied or renewed.

(8) Subject to subparagraphs (1) and (3), a consumer shall take reasonable care to disclose to the licensed insurer any matter, other than that in relation to subparagraph (1) or (3), that he knows to be relevant to the decision of the insurer on whether to accept the risk or not and the rates and terms to be applied.

(9) Nothing in this Schedule shall affect the duty of utmost good faith to be exercised by a consumer and licensed insurer in their dealings with each other, including the making and paying of a claim, after a contract of insurance has been entered into, varied or renewed.'

[4] The main question for determination in this action is whether the duty of uberrimae fide in a life policy should be confined only to information that is directly or indirectly related to the cause of death.

Background Facts

[5] The subject matter in the present suit is a life insurance policy entitled "PRUlink million" bearing No: 35053966 issued to one Selvakumar a/l T Kanniah ('the Deceased') by the Defendant ("the Policy").

[6] The Policy was issued pursuant to the Deceased's application and or proposal to the Defendant for the Defendant's insurance product entitled "PRUlink million" with "Crisis Defender" and "Enhanced PRUpayor basic" as add-on benefits vide a Life Insurance Regular Premium Proposal Form bearing No: 104130686 ("Proposal Form") submitted on 18 September 2015. "PRUlink million" is in essence a life insurance policy which provides coverage for, inter alia, death benefits.

[7] A few months after the Deceased's demise on 25 November 2015, the Plaintiff who was the named nominee under the Policy submitted a death claim to the Defendant on 5 April 2016 vide a death claim form dated 3 April 2016 ("Death Claim").

[8] The Plaintiff's Death Claim was rejected by the Defendant vide its letter dated 17 August 2016 on the grounds of non-disclosure.

[9] It is the Plaintiff's case that the Defendant was wrong to reject the Death Claim as the Deceased's death was due to heart disease and fatty