As an underwriter for 10 years now, let me come to GE's defense in their rationale for trying to void the policy.... I'm not working with GE, so this comment is not in support of them, it is just to let you all know how underwriters work....


The concept is easy, if GE knew that the client had history of anxiety attack, they would have declined the case right then.


So you have to do some imagination. Think of the sequence of events that would have happened if client did declare the condition during application.


In chronological order...
Feb 2014 - Aware of her psychological illness
Apr 2014 - had a psychological consultation history
--- 2015 - Bought 1st GE policy - without declaring that she did not have depression or anxiety at all material times
(**IF CLIENT HAD DECLARED THIS, GE WOULD HAVE DECLINED HER APPLICATION UPFRONT, HER APPLICATION WOULD HAVE NOT EXISTED.)

Feb 2017 - diagnosed with anxiety attack and was prescribed Xanax
Feb 2017 - consulted with another doctor + infection in body
--- 2018 - Bought 2nd GE policy - without declaring that she did not have depression or anxiety at all material times
(**IF CLIENT HAD DECLARED THIS, GE WOULD HAVE DECLINED HER SECOND APPLICATION AS WELL, HER APPLICATION WOULD HAVE NOT EXISTED.)


Fast forward to now, client had cancer. Can she claim for her policy if these 2 cases was already DECLINED in 2017 and 2018? Can she claim if the policies does not even exist, because like Thanos, it has been snapped out of existence??
**You can use Back to the Future as an example. If you go back in time and "kill" someone (i.e: Decline the policy in 2017 and 2018), will the person's child (i.e: the claim) still exist now?


Imagine, person A rob a bank and buy a house. When person A got caught and the police realize, the $ no longer with person A but is now changed to a house. Should person A get to keep this house?

---> Apparently, Malaysian courts say "YES", coz it is no longer the $$$ that was robbed from that bank. Logically, the house should not belong to person A, coz it was WRONGFULLY acquired from illegal means.
In another context, Rosmah is innocent, coz the money from 1MDB is no longer available, it is now in the form of Berkin bags. The Berkin bags were bought legally, so it is OK. Innocent Rosmah.

---> So same as this case, the person lied and illegally got the policies. Should they get to keep the $$, even though it should not have belonged to the client in the first place? Imagine if you got conned by a conman and the conman buys gold using your money. The police catch the conman and can only find that gold. Will you want to get that gold back? Or will you say, "Oh, my money is no longer here. That gold belongs to the conman coz he buy using "his" money"?



GE is not disputing that she cannot claim due to cancer. They are disputing that this 2 policy is ILLEGAL, coz she lied to get them.

What the court had done, is just to encourage everyone to LIE. Don't care about the consequences, just lie upfront.

So Malaysians should not complain if in future the insurers all start to raise premiums. Actuaries will start to take into consideration that a higher amount of people will lie and the health declaration in the application form is not reliable. So the only way is to charge everyone higher, including most HEALTHY AND HONEST ppl, who I believe are most Malaysians, so that they can be prepared to pay claims of policies that are obtained by LIARS.


This will lead to a spiral...
- More ppl lie during application coz the courts say it is OK to lie,

- Higher claims, coz ppl are just lying to get policies, they can be super unhealthy and still get policies.

- Insurers, to ensure they don't lose money due to the claims, have to increase premium prices,

- Higher prices, discourage healthy and honest ppl to buy insurance, coz why buy when it is so expensive? Their chances of claiming is lower anyway. (As in, they are healthy are have less chance of getting ill, such as heart attack, as compared to say, an obese BMI 40, who smokes 1 pack a day)

- Unhealthy ppl will prefer to buy insurance and lie to get their policy, coz pay a little bit can get more $$ from claims, why not just lie?

- This cause claims to get even worse, as less healthy ppl buy but more unhealthy ppl buy

- Cycle continues, premiums keep getting more expensive year after year....



If you have the chance to go to Singapore, try getting a quote for the same cover as Malaysia. You will quickly realize, Singapore life insurance is cheaper than Malaysia. This is due to their Actuarial calculations, that allow for lower rates due to their higher health quality and the better insurance laws.

This post has been edited by Limster88: Apr 16 2021, 12:24 AM

I'm still a Life underwriter, though i am now based in Singapore and work for a Singaporean insurer.
I started my career in Malaysia, so i know how Malaysian life insurance companies work. It is the same concept everywhere actually, modern insurance policies dont really differ too much nowadays.

The problem with the Malaysian style of attaching health riders to an ILP plan is that when an underwriter needs reject the life plan, everything attached to it will be rejected as well.

Mental conditions have a great impact on life cover. Suicide after the waiting period is claimable, so for a person with history of mental issues it is one of the risks the insurer had to take into consideration. Depending on the risk philosophy of the company, some companies will decide that these risks are not something that they want to take.

In the end it is all about price. A more conservative insurer that screens out applications more tightly can limit its future claims. This gives it more room to either earn more profits, or, reduce / control premium prices to be more competitive in the market.



And yes, insurers adopt the utmost good faith concept in approving policies. This is also in line with PDPA regulations. After all, if you are honest upfront, there's nothing to worry about right? An insurance policy is just a contract, so the insurer is bound by it if the premise of the contract is valid.

The government also do not want the insurers to willy nilly obtain and keep people's personal health information, so this is the current practice. Not all policies will turn into claims, so there is no need for insurers to be so intrusive and check everyone's health background. You think that the insurers don't want to get everyone's information? Given the chance they definitely want to. More information means more accurate actuarial projection, means better pricing and competitiveness.


Long ago, before PDPA laws came into force, we used to have this LIAM system, where insurers will share with each other on the health conditions of their clients. There is no escape. If you are rejected by company A, then you try to apply with company B, you will also be rejected coz they also know about the health conditions too.

Then came PDPA enforcement and all these ended. Now the industry had to operate on a more limited information and therefore had to start trusting their customers based on utmost good faith.

The only time the insurer has expressed approval to check everything regarding to your medical background is during claims, because this is the only time that PDPA rules allow them to fully access your medical records. So you can be sure that if you do not disclose information to your insurer and they find out about it, it will then go to post claims underwriting, where we will re-underwrite the application again, assuming that if we know about the condition in the first place, what will the underwriting decision be.


For example, let's say someone lied about smoking during the application, thinking that they can pay cheaper premiums. This commonly happens.

The problem will come when they claim, coz when their doctors ask them about their health condition, people tend to answer honestly so that the doctor will be more accurate in their diagnosis. So upon claims and the insurer gets the medical report from the doctor, claim assessors will cross check the declaration and information from the doctor and if they find out that this client had been smoking when the application was signed, you can bet that before paying out the claim, the insurer will readjust the contract and calculate all the back pay of premiums that this client needs to pay, which they can either deduct from the claims payout or if it is not enough, demand the client to pay the balance. If the client refuse, then obviously this contract is not valid from the start, and the insurer can void it.