Insurers cannot repudiate claims based on non-disclosure of income if the nature of employment remains low-risk, and the knowledge of an agent is imputed to the insurer.

[1] One Tholan a/l Iyasamy ("deceased") died on 29 August 1999. He was 62 years old. At the time of his death, three separate personal accident policies had been issued by the defendant to the deceased. The plaintiff claims that he was the nominee of the said insurance policies. He made a claim with the defendant. This claim was rejected. Hence this suit.

[2] Several reasons were given by the defendant for the repudiation of the claim which reasons have now become the issues to be resolved in this action. The reasons or issues are as follows:

1. Whether the plaintiff was the nominee for all three policies;

2. Whether there was a material non disclosure by the deceased; and

3. Whether the death of the deceased was due to an accident, which was a risk covered under the said policies, or if it was due to an illness for which the claim will then become non-payable.

Whether The Plaintiff Was The Nominees For All The Policies

[3] It was not disputed that three policies were issued to the deceased as follows:

1. No. P738782551 ("Policy 1")

2. No. P738782564 ("Policy 2")

3. No. P738782522 ("Policy 3")

[4] The total sum insured under these policies was RM430,000. A notable feature, and which will be alluded to in a moment, was that all the three policies were issued on 3 June 1998. The defendant conceded that the plaintiff was the nominee for Policy 3 but claimed that they did not receive any nomination forms for the other two policies. This was in spite of the fact that the plaintiff was able to produce two nomination forms signed by the deceased for Policy 1 and Policy 2.

[5] Now it was not disputed by the defendant that the nomination forms in question for Policy 1 and 2, as produced by the plaintiff, were that of the defendant company. It was also conceded that the nomination forms were signed by the deceased. Their only contention was that from their records, the nomination forms were not handed over to the defendant.

[6] In this regard, there was, however, evidence that the deceased was dealing with an agent of the defendant company, one V. Shanmugabalan. The agent's name was stated in the said nomination forms. The defendant did not appear to quarrel with the fact that he was indeed their agent.

[7] What is noteworthy and peculiar as well is that whilst all these policies were issued at the same time, the defendant had records of only one nomination form. The defendant's witness, DW2, conceded that this was unusual. It was also the practice in the industry that the agents would handle all such matters such as filling up of the nomination forms and handing them over to their principal.

[8] In this regard, ss. 165(1) and 151(1) of the Insurance Act 1996 ("the said Act") are relevant. Section 165(1) of the said Act reads:

Subject to subsection (2), where a policy owner dies having made a nomination, the licensed insurer shall pay the policy moneys of the deceased policy owner according to the direction of the nomination upon receipt of a claim by the nominee and the claim is accompanied by proof of death of the policy owner.

[9]Section 151(1) of the said Act reads:

A person who is authorized by a licensed insurer to be its insurance agent and who solicits or negotiates a contract of insurance in that capacity shall be deemed, for the purpose of the formation of the contract of insurance, to be the agent of the licensed insurer and the knowledge of that insurance agent shall be deemed to be the knowledge of the licensed insurer.

[10] In this regard as well, the Federal Court in The "