PROFESSIONAL INDEMNITY

PROFESSIONAL INDEMNITY for Life Agents, Unit Managers, District Managers of American International Assurance Berhad and AIA Public Takaful Berhad ManpreetKaur Gill Date : 09.06.2016

Agenda • Introduction • Claims • Policy Coverage • Question & Answers AIA PI

Introduction

General Principle of Agent • Insurance Agent • An intermediary who is authorized by the Insurer to act on behalf of the Insurer to arrange supplies of insurance policies • 2. What do they do? • Insurance agent contact potential customer and sell one or more type of insurance. It is an insurance agent responsibility to explain various insurance policies and choose the right policy they suit their needs Footnote

What are the Exposure of Insurance Agent • Failure to procure the necessary insurance protection based on their client request. The court may view this as a breach of professional duty because. • The failure to effectively communicate and explain the coverage being offered • Exposure for agent is in the storing and proper handling of sensitive client data Footnote

Claims

Claim Scenarios of Agent Professional Negligence • An agent arranges a Medical Plan on behalf of a customer. It was alleged that the planner did not explain the implications of the moratorium period on her new plan. The customer would have had some cover on her old policy if she had not switched, albeit at a lower limit. • A person retained an insurance agent to effect comprehensive insurance to cover her business operations, and the agent neglected to file the appropriate paperwork to make the policy active, then the agent has been negligent. If an accident happens and the business is not covered because of the agent’s failure to file the appropriate paperwork, then the client may argue the insurance agent is liable for malpractice under a theory of negligence. Footnote

Claim Scenarios of Agent Professional Negligence • A client asks her agent to find her a home insurance policy that will provide coverage against damage to or loss of all the contents of her home. The agent selects a plan for the client but, after a break-in, the insurance company denies coverage for antique jewelry based on an exclusion in the policy. The client may file a claim against the insurance agent for malpractice because he failed to select a policy that would meet her stated needs. Footnote

How To Tackle The Exposures Footnote

Policy Coverage

Policy Coverage Footnote

Awards / Judgements / Settlement • AIA cases • The smallest reserve was RM 5,000 and the biggest reserve was • RM 100,000 • General Claims • In a region of RM 25,000 to at least RM 3,000,000. Footnote

SAMPLE of LEGAL COSTS • The fees payable by you will generally depend on the amount of work done on your behalf, the time taken and the difficulty of the work involved. • Prior to 2011, filing civil case at the magistrate’s court cost only RM 2,000. However in March 2011, Bar Council President RagunathKesavan expect lawyer fees to increase by 300% to 400% so you will cost the cost rise from RM 2,000 to RM 8,000 or RM 10,000. • This does not include cases filed in High Court, which has a bigger responsibility. • Source from The Star, March 01, 2011 and Article By Bhag Singh of The Malaysia Bar Council Footnote

Sample of Legal Cost Footnote

Policy Coverage • Who is the Insured? • Life agent, District manager, Unit manager, • Any consultant, independent contractor, temporary contract labour, self employed person, who are solely under contract with and/or under the supervision of the life agent and/or life agents of the district manager/unit manager, Valid and current members of AIA Berhad and/or AIA Public Takaful Berhad Footnote

Pricing • Limit of Indemnity Premium per person per year • RM1,500,000 any one claim and in the aggregate • for any one Life Agent RM 120.00(excl GST) • RM3,000,000 any one claim and in the aggregate • for any one Unit Manager/District ManagerRM 220.00 • (excl GST) • and RM30 million in total Liability AIA PI

Questions & answers

Policy Coverage Footnote

Scope of Cover • Compensation for Court Attendance – this is a benefit of RM250 per person per day up to RM100,000 for agents and RM500 per person per day up to RM250,000 for District Managers/Unit Managers • Continuous Cover (condition apply) • Extended Reporting Period – up to 90 days beyond the POI to report claims made during the POI (condition apply) AIA PI

Scope of Cover • Investigation and Representation Expenses – pay for costs with respect to official investigations – up to RM100,000 any one claim and RM1,000,000 for agents and RM150,000 any one claim and RM1,500,000 for District Managers/Unit Managers • Data Protection Breach (PDPA) – amount payable RM100,000 any one claim and RM1,000,000 for agents and RM150,000 any one claim and RM1,500,000 for District Managers/Unit Managers • Territory/Jurisdiction : Worldwide excluding USA/Canada • Retroactive date – unlimited retroactive cover • Deductible : RM2,500 each and every claimant inclusive of costs and expenses AIA PI

Thank you ManpreetKaur Gill Liability Manager

PROFESSIONAL INDEMNITY