Legal / Events

Guest Column
By Dr. Wickrama Weerasooriya

Insurance: Do’s and don’ts

As the Insurance Ombudsman, in Sri Lanka, I would like to highlight the following matters for the guidance of the public who wish to take out insurance policies.

* There are now fifteen companies engaged in Insurance business in Sri Lanka. They are all private companies. They all use Agents to sell their policies. It is normally the Agent who brings the proposal form to you when you want to insure. He also helps you to fill up the form. Sometimes the Agent himself fills up the form and you merely sign.
However, please make sure that you know what is stated in the proposal form because once you sign it you cannot be heard to say that it was the Agent who filled it up and therefore you are not responsible. A person who signs a document is liable for what he has signed.

* All insurance contracts are governed by a legal principle called “utmost good faith” It comes from a Latin term ‘uberrimae fidei’. Many who insure do know this term or understand its consequences.
Normal contracts are not governed by such a requirement. For example, when you buy a TV set or a motor car or a house you can inspect it before you buy it. So you know what you are buying.
But in insurance, as a general rule, the insurance company does not see or inspect the car or the house etc that you insure. They also do not see you physically when you take a life or health policy. So the insurance company depends entirely on what YOU tell them about what you insure. This is done through the proposal form you have to fill up. This is the reason for the requirement of utmost good faith on your part
The concept of utmost good faith applies to all insurance contracts whether it be life, fire, motor or home insurance. Only you know all the facts about what you are insuring. So you must disclose ALL information asked.
Regrettably, as Ombudsman I was unable to help several people whose claims were rejected because they had not honoured the principle of utmost good faith and were liable for non-disclosure of material facts.
You cannot also say that the insurance company’s Agent told you that certain questions in the proposal form can be left unanswered or blank or that it is all right to give an incorrect answer.
The insurance company is not liable even if their own Agent has misled you. This is because it is YOU and not the Agent who is taking the insurance. It is also your signature that appears on the proposal form and once you sign you are liable for what is in the form.

* Proposal forms are therefore very important. So read them carefully and do not sign them unless you understand what is stated in the proposal form and you agree with the answers to the questions in the form.

* In Motor Insurance do not under value the vehicle in order to reduce the premium payable. If you meet with an accident and want the vehicle repaired the insurer will for the first time inspect and see vehicle. He will soon realise that the vehicle is worth very much more than the value for which you insured. Then the insurance company can impose a stiff penalty.
If you contest, they can offer to buy the vehicle at the value you insured. Thus, there is no escape if you undervalue.

* In Life insurance, however difficult it may be, please pay the premiums due on time.
If premiums are not paid, the life policy can lapse.
You cannot then get your money back unless there is a ‘maturity value’ or “surrender value” to the policy which is normally a minimum of three years.
Also, remember during that time your life was covered.
Some people have asked me to direct the insurance company to refund the premiums paid. This cannot be done unless there is a ‘Surrender Value’ – because you were protected and covered during that period although there was no claim.

* If your life policy lapses because you have not paid premiums on time, the insurer can ask you to fill up a new proposal form to continue the policy.
By this time, your health conditions may have changed and deteriorated with age and you may have developed medical ailments which you now have to disclose.
If you had not allowed your earlier policy to lapse, you would not have had the need to fill up a new proposal form and the insurance company had accepted the risks of the ailments that you may have developed. So please ensure to pay the premiums on time and do not allow your life policy to lapse.

* Several persons have also complained to me about the bonuses received on their life policies.
The Agents of companies had promised very high bonuses and even given such an assurance in writing on the insurance company letterheads.
But the insurance company is not liable for such assurances of Agents relating to bonuses. Bonuses are generally calculated on the interest rates in the country.
Thus, they can fluctuate in amount and are not necessarily fixed amounts. You should contact the insurance company itself about any bonus issues.

* Currently, I am having problems on claims relating to Third Party cover. This is mainly where third party motorists and pedestrians have been affected by motor accidents.
Insurance companies are only liable if the steps set out in the Motor Traffic Act have been observed. Many members of the public are unaware of these steps. So please consult a knowledgeable person if you wish to make a third party insurance claim.

* If an accident occurs which you think is covered by the insurance policy you have taken – for example, if there is damage to your workplace or factory by a fire or electrical problems or if there is a loss by burglary, you must inform the insurance company immediately (apart from notifying the Police etc). Do not repair the damage caused by the accident without getting the approval of the insurer. It is a condition in your policy that you will inform the insurer and get his approval. If you do not abide by conditions set out in your policy, the insurer can reject liability. Many people do not read their insurance policies.

* I must also issue a caution to anyone who wishes to travel inside an Ambulance to accompany a patient.
I have found that some Ambulances have not taken proper insurance cover. I inquired into a case recently where three persons who travelled inside an ambulance accompanying a patient were badly injured by a accident. The patient also died.
It appears that while the ambulance itself and the driver was covered the ambulance had no insurance cover to protect those who travelled inside it.
So before you get into an Ambulance make sure that you are covered in the event of an accident.

* We must have greater Awareness about insurance. The concept of insurance is not sufficiently known or understood in Sri Lanka. Unlike say agriculture where our people are culturally adapted, Insurance is entirely an English concept.
I have asked insurance companies to create greater Awareness about insurance and not restrict their advertising budgets to Marketing their respective policies.
Because of a lack of adequate knowledge about Insurance and its benefits and pitfalls, I strongly advise those who take out large insurances to go through a good broker.
There are over Fifty insurance brokers in the country who are registered with the Insurance Board of Sri Lanka (IBSL). The Broker’s fees are paid not by you but by the Insurance Company.
Let me conclude by informing the public that my office is located at 143A, Vajira Road Colombo 5. (The same road where Visakha Vidyala is located). My telephone and fax nos. are as follows:4528671 and 4528670.
I am also on the Internet/Web site and Email as follows:
www.insuranceombudsman.lk and info@insuranceombudsman.lk
We provide a free, friendly, accessible service. If you have any dispute relating to insurance, first contact the insurance company. If there is no satisfactory solution apply to our office. There are no special forms to fill up. Just send a signed letter with the policy reference number and name of the insurer briefly indicating your complaint.

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National IT Law Conference
Law conference with a difference

The National Information Technology Law Conference will be held on September 8 and 9, at the Hotel Trans Asia.
This Conference is unique in that there have been very few seminars or conferences addressing the legal issues and challenges that have arisen as a result of the use of information technology, Secretary of the Bar Association of Sri Lanka (BASL) and Chairman of the IT committee of the BASL told The Nation.
This conference, which is proposed to be held as an annual event, is organized by the IT Committee.
The rapid advancement of information technology has made the task of policy and lawmakers much more difficult and technology has stayed well ahead of the legal framework.
This conference will address the various contemporary legal issues affecting not only industry, but also the citizen, because of the use of information technology.
Those employed in the IT sector, bankers, telecom industry personnel, those engaged in outsourcing, those concerned with the impact on intellectual property and all perceptive professionals will find this conference of interest.
Sessions will cover recent legislation covering information technology, credit card frauds, the imposition of customs duty on software, electronic banking, telecommunications, outsourcing, computer evidence and forensic issues, and IP issues in Information Technology.
The speakers include Presidents Counsel Kanag Ishvaran and Dr. Harsha Cabraal, Professor Zafrullah, Dr. Tissa Hemaratne and Attorneys at Law, Mr. Kalinga Indatissa, Mr. Sunil Abeyaratne, Mr. M. A Sumanthiran, Ms. Anoja Obeysekera, and Mr. Jayantha Fernando. They will be joined by a distinguished panel drawn from the state and the private sector.

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New concerns on child protection

By Sarath Malalasekera
Chairman of the Legal Aid Commission S.S Wijeratne was last week elected as the President of the Child Protection Society.
The new president in an address soon after taking up presidency said that the continuity of the armed conflict, resulting in the alleged conscription of children, and the devastating effects of the Tsunami had made life particularly unsafe for children in Sri Lanka.
Under the Tsunami Special Provisions Law these children have to be cared for by immediate relatives living within the vicinity, Wijeratne said. He was of the view that the Child Protection Society should have been entrusted some of the “Tsunami orphans” under the supervision of the Probation and Child Care Department .
The prevention of cruelty, neglect and exploitation of children are the basic objectives of the 76 year old Child Protection Society.
Wijeratne said that unlike in the 1930’s, the Child Protection Society was now confronted with a number of new issues concerning the protection of children.
He said that children in armed conflicts, child conscription, protection of children in institutional care, child labour, domestic violence on children, children as refugees or internally displaced, child sexual abuse, juvenile justice standards and child victims of HIV / Aids were challenges that have arisen over the past decades.
Wijeratne said that he was honoured to be made president of the Child Protection Society, which had presidents of the stature of the former Chief Justice Hema Basnayake, Retired Supreme Court Judges, Justice S. R. Wijayatilake and Justice O. S. M. Seneviratne and immediate past president, past Principal of the Sri Lanka Law College, former Secretary to the Ministry of Justice and retired Judge, Walter Laduwahetty.
He said that efforts of the Society had some influence on the Government of Sri Lanka ratifying the UN Convention on Child Rights Convention of 1991 and even belatedly establishing the Child Protection Authority by Act No. 50 of 1998 and the 1995 amendment to the Penal Code aimed at protecting child rights.

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Welfare of elders Our duty to look after parents

By Dharmapala Senaratne
Nearly 2.5 million persons in our country are over 60 years of age. The percentage of such persons in proportion to the entire population is annually increasing. In other words, Sri Lanka has a fast ageing population.
The causes are many. Improved health care schemes, increased life expectancy, rate of the birth in the country having decreased are some of the factors. It creates several problems to the nation which is on par with developed countries, at least on that score.
Thus, there are elders with numbers increasing annually to be looked after by the working population. Undoubtedly, the elders deserve and are entitled to be so looked after.
It is in that light that the Protection of the Rights of the Elders Act No. 9 of 2000 should be viewed. Certified on 04th May, 2000, the implementation of it commenced two years thereafter and so the Act is in operation as at present.
A National Council for Elders has been established thereby. It consists of 15 members, 3 of whom are ex-officio members while the others are appointed by the President in consultation with the Minister in charge of the subject of Social Services. The Council is assisted by the National Secretariat for Elders.
What is of significance is the Boards established under the provisions of this Act. Each Board consists of 5 members. It can function despite vacancies unlike the much talked of Constitutional Council. Many are still unaware that these Boards are judicial bodies performing judicial functions and deciding rights and duties of parties appearing before them.
Since the Act does not preclude Attorneys- at- Law from representing parties at the proceedings before the Boards, provisions of the Judicature Act should apply here. Section 41 of the Judicature Act provides that every person who is a party to any judicial proceeding has the right of being represented by an Attorney-at-Law.
But what is funny in a sense here is that the disputes coming before the Board are invariably those between elder parents and their children, the former claiming maintenance from the latter as of right under the law.
Up to the enactment of this Act, there were absolutely no statutory provisions of a like nature on our Statue Book.
Incidentally, ‘an elder’ for the purposes of this Act has been defined to be ‘any person who has passed the age of sixty years’. Similarly, a child includes an illegitimate or adopted child and a stepchild.
It is noteworthy that in respect of the specified area of jurisdiction, the Board has all the powers of a District Court to summon and compel witnesses and to cause the production of documents. It also can administer an oath or affirmation to witnesses.
Any person committing the offence of contempt or acting in disrespect of the authority of the Board will be dealt with by the Court of Appeal as though it were an offence of contempt of that court. Any person dissatisfied or aggrieved by an order of the Board can make an appeal to the Court of Appeal within 21 days.
In terms of section 25 of the Act, ‘an elder who has a child or children and who is unable to maintain himself may apply to the Board for an order that one or more of his children pay him a monthly allowance or any other periodical payment or a lump sum for his maintenance. The Board will then refer it to a conciliation officer for mediation who will endeavour to resolve the differences between the parties and to assist them to reach an amicable settlement.
On failure of such endeavour, the Board will take the matter for hearing, take evidence of witnesses on oath or affirmation and documents and finally make an order. Maintenance orders made in that manner are deemed to be an order made by the Magistrate under the Maintenance Act and may be enforced in like fashion, that is to say, as if it is a fine imposed by the Magistrate.
However, my view about this law is not quite a favourable one.
While in developed countries, the state has adopted diverse welfare measures for the benefit of their senior citizens, Sri Lanka has shirked that responsibility, in my view, and attempted to impose responsibility on the poor progeny of the elders who themselves are struggling to keep their home fires burning.
(The writer is an Attorney- at- Law)

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Fraud and Money Laundering

A seminar titled, “Fraud and Money Laundering - planning for Sri Lanka’s future” organized by the CIMA Sri Lanka Division will be held on 30th August 2006 at the CIMA Auditorium, 356 Elvitigala Mawatha, Colombo 5.
The speakers at this one day seminar will be David Cafferty, Training Director, Association of Certified Fraud Examiners, UK Chapter and Member of the CIMA Technical Advisory Group and Naomal Goonewardena, Partner, Nithya Partners
The course outline will include auditing for internal fraud, construction industry fraud, financial statement fraud, internet fraud, money laundering - background and history, Prevention of Money Laundering Act 2006, customer due diligence and identifying suspicious transactions.