Hospitalisation Claim - Non-Disclosure
The insured was admitted on 1 March 2016 for Neissera Meningitis Bacteria, Atrial Fibrillation secondary to Sepsis, Acute Kidney Injury secondary to Sepsis, Syphillis and Dry Gangrene of foot.
However, the insured’s hospitalization claim was repudiated on the ground of non-disclosure of the insured’s medical condition,i.e. syphilis for more than 40 years which was not disclosed in the Proposal Form dated 24 July 2005.
The insurer’s decision was based on the Discharge Summary dated 2 June 2016 wherein it was reported that the Insured’s past medical history includes history of Syphilis for more than 40 years ago.
Investigation and Findings
It was observed by the Case Manager that the insured’s Proposal Form contained the following questions:-
2. Has the person to be insured ever undergone any surgical operation?
3. Has the person to be insured ever been hospitalised for any illness or injury?
4. Is the person to be insured currently under medication or supervision of a doctor or physician for any illness or disability?”
The insured had answered ‘Yes’ to Question 2, 3 and 4 in the proposal form and disclosed the following medical condition:-
- Operation for slip disc in 1994;
- Gallbladder removal in 1998/99; and
- Hypertension in 1998.
It is important to highlight that the insured had disclosed all his medical condition except for Syphilis which was diagnosed for more than 40 years during the completion of the said Proposal Form.
The law on non-disclosure is based on the ‘reasonable insured’ test under Section 150(1) of the Insurance Act 1996 and as propounded in Pacific & Orient Insurance Co. Sdn Bhd v Kathirvelu (92), MLJ 249, i.e. a reasonable person in the circumstances could be expected to know to be relevant;
It is interesting to note that the diagnosis of Syphilis was made for more than 40 years with no subsequent follow up treatment. Thus, there is a tendency for the insured to forget his one-off diagnosis of Syphilis. On this note the Case Manager referred to the judgment of Sir Robert P. Collier in Connecticut Mutual Life Assurance Co. of Hertford v. Moore  6 AC 644, wherein it was held that:
“They could not reasonably expect a man of mature age to recollect and disclose every illness, however slight, or every personal injury, consisting of a contusion, or a cut, or a blow, which he might have suffered in the course of his life. It is manifest that this question must be read with some limitation and qualification to render it reasonable;
In addition to this, it was also noted that there was no specific question in the said Proposal Form which requires the insured to disclose his history of Syphilis for more than 40 years ago. Being a layman and not medically trained the insured could not be expected to disclose his medical condition when the proposal form does not reflect any questions of such effect. In the absence of such it has the effect of limiting the insured’s duty of disclosure.
The Case Manager highlighted the following:-
- In the case of Roberts v. Plaisted (1989) 2 Lloyd’s Rep. 341 it was held that when a question in a proposal form is framed in such a manner as to give an insurer all the information he requires, it may limit an insured’s duty of disclosure;
- The Bank Negara Malaysia Guidelines on Medical and Health Insurance Business (BNM/RH/GL/003-20) had set out the minimum standards aimed among others to securing a minimum protection for policy owners. It provides the following,
“D. UNDERWRITING AND TERMS OF ISSUE
12. An insurer is required to take reasonable measures to assist insurance applicants in fulfilling their duty of disclosure under Section 150 of the Insurance Act in respect of relevant information for underwriting assessments. For this purpose, an insurer shall ensure that its proposal forms:-
a) include specific questions that are designed to solicit information that is relevant to the decision of the insurer as to whether or not to accept to accept the risk, and the premium rates and terms to be applied. In principle, the questions should be appropriately scoped (in terms of details requested and reasonable timeframe to which the questions apply an insurance applicant to answer the questions with a reasonable degree of confidence without running the risk subsequently compromising his coverage as a result of inadvertent non-disclosures; and....
13. An insurer that does not comply in substance with paragraph 12 shall not subsequently repudiate a claim on grounds of non-disclosure by a policy owner....”
Based on Question 2, 3 and 4 in the Proposal Form, the insured was required to disclose:-
- any surgical operation;
- hospitalisation for any illness or injury; and
- any medication or supervision of a doctor for any illness or disability.
The only information available in the Discharge Summary is that the insured was diagnosed of Syphilis for more than 40 years ago. There was no information which showed that the insured had been hospitalised or underwent any surgery or under any medication for such illness.
The fact that the insured had disclosed his other medical conditions i.e. operation for slip disc in 1994, Gallbladder removal in 1998/99 and Hypertension in 1998, is an inference that the insured is concern with the accuracy of the answer given by him in the Proposal Form.
Based on the observation above, the Case Manager opined that the complainant’s claim warrants a review.
The insurer agreed to settle the claim based on the observation made by the Case Manager.