ABOUT
INSURANCE ..... |
gives
you a quick guide to the history, nature, legislation, functions and
organisations of insurance in Malaysia
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Insurance
legislation |
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The
Insurance Act was introduced in 1963 and it is the main set of rules and
regulations governing the operation of life and general insurance
business in Malaysia. The Insurance Act, 1963 and its subsequent
amendments provide the Director-General of Insurance (DGI) with the
process of general supervision and control of the insurance industry.
The life and general insurance business, just as any other form of
business, is subject to other statutory laws. Some of these are:-
- Companies Act, 1965
- Malaysian Income Tax Act, 1967
- Unclaimed Monies Act, 1965
- Civil Law Act 1972, and
- Estate Duty Enactment Act, 1941
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Law
of Contract
A contract is an agreement between 2 or
more parties. The parties to an insurance contract are the insured and
the insurer. However not all agreements are contracts. To constitute a
contract the following elements are essential:-
- Offer and Acceptance - the
proposer makes the offer to the insurer. If satisfied with the risk,
the insurer accepts it.
- Consideration - the insured's
consideration is the premium and the insurer's is the promise to
provide indemnity in the event of a loss. If the insured fails to
pay the premium, the contract is not valid and the insurer therefore
will not be liable for any claim. However, Section 44A of the
Insurance Act, 1963 has amended this position in respect of motor
insurance contracts. The insured is required to pay the premium on
the day he is afforded insurance cover. Once a cover note or a
policy is issued, it is taken that the contract is valid. If the
insurer failed to collect the premium, the insurer cannot
subsequently repudiate liability on the grounds that consideration
was not furnished.
- Consensus ad idem - both
parties should agree to the same thing with the same mind.
- Capacity of the parties -
minors and persons of unsound mind cannot enter into contracts. But
the Insurance Act, 1963 provided legal capacity to anybody above 16
and on condition that the written consent of the parent/guardian is
obtained for those above 10 but below 16.
- Legality of the contract - the
subject matter of the contract must be legal. For example, stolen
goods cannot be insured.
All contracts are governed by the general
principle of the law of contract as specified in the Contracts Act,
1950.
Law
of Agency
The law of agency is the law governing
situations where one party, the principal, is represented by or acts
through another, the agent, in a matter that may create a legal relation
between the principal and a third party. In such an event, the principal
may incur a liability to a third party whilst the agent is under no such
liability. This is summed up by the legal maxim 'qui facit per alium
facit per se' which means 'he who does something through another does it
himself'. |
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