Remedies Available When Your Insurance Claim is Rejected
Have you been in a situation where having submitted your insurance claim to your insurer, you subsequently receive a letter from your insurer telling you that the claim is declined (for whatever grounds) or your insurer giving you a less than satisfactory compensation? Or perhaps you have heard of such experiences by someone you know?
Insurance claims rejection (also known as repudiation) is not uncommon. Far more common would be a less than satisfactory compensation offered for the insurance claim. Faced with those scenarios, what remedies are available to the insured / policyholder?
Demand full explanation from Insurance Agent or Broker / Claims Department
If you have an insurance agent or broker who is servicing your account, get their assistance on this matter. Ask them to explain to you why the claim was repudiated. Insurers in Malaysia are required to state their reason/s for a repudiation and if you are unsure of the insurance terms used, your insurance agent might be able to help you. Alternatively, you should write to the Insurer for further explanation on the repudiation or to justify their amount offered for the claim. If the amount offered is not satisfactory, you are at liberty to appeal for a higher amount provided you are able to give good reasons for the same. The Insurer is obliged to give you a written reply upon your written appeal to the Manager / Senior Manager of the Claims Department.
Financial Mediation Bureau (FMB)
The Financial Mediation Bureau (FMB) is an independent body set up to help settle disputes between you and your financial services providers who are its members. Previously, it used to be known as the Insurance Mediation Bureau and the Banking Mediation Bureau but these two bodies were merged to the FMB. If you find that the reply from the Insurer is unsatisfactory, you may refer this matter to the FMB for mediation provided you satisfy certain criterias.
- The claim must not be more than RM200,000 (Motor and fire insurance/takaful), RM100,000 (Others) or RM5,000 (3rd party property damage);
- The complaint, dispute or claim is not related to general pricing, product policies or services of the members, cases which are time barred or more than 6 years and cases that have been or are referred to the court and/or for arbitration.
It is worthwhile to note that a decision of the FMB is binding on the Insurer but not binding on the policyholder. Hence, you are still at liberty to seek further recourse if you are not satisfied with the decision of FMB.
Get legal advice
If you are not satisfied with FMB’s decision, you should seek legal advice whether there are any merits to your case and whether filing a legal suit might be the next course of action. Of course, you might want to seek legal advice earlier (prior to FMB) to assess your chances but do bear in mind that you may need to pay legal fees then and the FMB procedure does not involve legal representation. Nevertheless, your lawyer might be able to guide you with the mediation process under FMB to increase the prospect of success unless you absolutely know what you are doing when you approach FMB alone with your case.
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