Utmost good faith in non-marine insurance contracts in Malaysia: the need for legal reform

2017-02-08T03:37:16Z (GMT) by Thanasegaran, Haemala
This thesis evaluates whether the duty of utmost good faith (the cornerstone of insurance contracts) is effectively regulated and in tum, observed by insurers and insureds alike in Malaysia. This is researched by evaluating the adequacy of the Insurance Act 1996 (Malaysia) and the Takaful Act 1984 (Malaysia), along with the supporting infrastructure and measures introduced by the Malaysian government in providing for the adherence to the duty of utmost good faith throughout the various stages of the insurance contract. The duty of utmost good faith is of a continuing nature spanning from the pre-contractual stage right through to claims settlement. During this period, the duty is imposed on insurers, insureds and intermediaries such as agents and brokers with respect to the requirement of disclosure and representation of material facts; construction of policy terms; and claims settlement practices. The thesis evaluates this duty from both a doctrinal as well as social science perspective, in order to propose suitable legal reform. The former is undertaken by means of a comparative analysis of the Malaysian position with other common law jurisdictions, mainly the United Kingdom, Australia, New Zealand and Singapore, throughout the various stages of an insurance contract. The latter analyses the position in Malaysia, and proposes reform from a socio-economic perspective. Socio-cultural perspectives are considered because they underpin the effectiveness or otherwise of a legal system (and by analogy any law). Thus, the thesis examines Malaysian legal culture to ascertain whether it supports the existing insurance law and structure or it calls for reform. Economic perspectives are considered to weigh the cost and benefits of the current position and proposed reforms. The thesis finds that reforms are needed to improve Malaysian law and practice regulating utmost good faith in insurance contracts. The reforms need to cover substantive and procedural issues relating to non-disclosure, misrepresentation of material facts, the role and influence of intermediaries in respect of disclosure, claims handling and settlement practices, and enhancement in the role of mediation in settling insurance disputes. The thesis proposes reforms on these issues.