PETALING JAYA: The High Court in Ipoh has ruled that Zurich Takaful Malaysia Bhd was entitled to void a family takaful policy after finding it was obtained through deliberate fraud, despite failures by the insurer’s own agent to follow basic underwriting procedures.
Justice Moses Susayan said the agent admitted that he had never met the insured, witnessed the signing of the proposal form, or verified the information submitted before the policy was issued.
However, the judge said these failures did not invalidate the contract as Zurich Takaful had accepted the proposal, issued the certificate and collected RM3,000 in contributions.
He said an insurer could not rely on its agent’s negligence to escape contractual liability.
However, Susayan found that the policy had been obtained through deliberate and coordinated misrepresentations by nominee Yathavan Doraisamy, allowing Zurich Takaful to void the contract under Schedule 9 of the Islamic Financial Services Act 2013.
Zurich Takaful filed the suit after rejecting a claim following the death of Parameswaran Kannan in a bicycle accident in April 2018, about six months after the policy was issued.
The insurer alleged that the proposal form contained false declarations regarding the deceased’s marital status, occupation, income, address, literacy, alcohol consumption and relationship with Yathavan.
Yathavan denied the allegations and filed a counterclaim for the policy proceeds.
In his 39-page judgment, Susayan said evidence, including another takaful policy with similar fabricated family relationships, pointed to a fraudulent scheme rather than innocent mistakes.
He found it highly unlikely that Parameswaran, who remained married and supported his wife and five children, would have excluded them and nominated a distant relative to receive more than RM800,000 in takaful benefits.
The judge concluded that the proposal form was likely completed by Yathavan to ensure the policy proceeds would be paid to him.
Although Zurich Takaful also questioned the circumstances surrounding Parameswaran’s death, Susayan declined to find that Yathavan had committed any criminal offence, noting that police had classified it as an accidental death.
He said the claim failed because of the fraud committed when the policy was obtained.
The court also rejected allegations that Zurich Takaful’s former solicitors conspired with Parameswaran’s widow to fabricate evidence, saying there was no proof despite concerns over how confidential policy documents came into her possession.
Allowing Zurich Takaful’s claim, Susayan declared the policy validly voided, dismissed Yathavan’s counterclaim and ordered the insurer to refund the RM3,000 contribution to Parameswaran’s lawful widow.
He made no order as to costs, saying the case should never have reached court because the insurer’s own agent had abandoned basic underwriting safeguards in pursuit of a quick commission.
Raam Kumar appeared for Zurich Takaful, while Vigneswaran Raju acted for Yathavan.
