S Ltd had a legal obligation which might lead to substantial sumsbeing payable and which was capable of pecuniary evaluation, and the subject ofthe insurance was not so specific that it did not embrace the interest. It followed that the object of the policy was tocover S Ltd for the losses it would suffer as an insurer of its members underits rules.
The disputed policy was not onany view a simple life policy which paid S Ltd on the death of a particularidentified individual: rather, the policy was agreed to pay fixed sums forinjuries sustained by Original Persons but in respect of losses occuring inrespect of S Ltds members. In the instant case,it was common ground that the policy was a policy to pay fixed sums on thehappening of certain events and therefore fell within s 1 of the 1774 Act butthe fact that sums were payable on certain events did not end the inquiry as towhat the subject matter of the insurance was or whether the subject matter ofthe insurance embraced the insurable interest. Moreover, although the subject or terms of the policy might be sospecific as to force the court to hold that the policy had failed to cover theinsurable interest, a court would be reluctant so to hold. It wasalso established by the authorities that the question of whether a policyembraced the insurable interest intended to be recovered was a question ofconstruction. Held - (Ward LJdissenting) Previous authority demonstrated that it was difficult to defineinsurable interest in words which would apply in all situations: Ĭontext and the terms ofthe policy with which the court was concerned would be all-important. The firstdefendant appealed against the judges conclusion that S Ltd had an insurableinterest. The firstdefendant reinsurer argued that S Ltd had no insurable interest in the livesand well-being of the Original Persons and therefore contended that theinsurance was unlawful by virtue of s 1 a of the Life AssuranceAct 1774, which provided that no insurance shall be made on the life orlives of any person or persons wherein the person or persons for whose, use,benefit, or on whose account such policy or policies shall be made, shall haveno interest, or by way of gaming or wagering The judge found, inter alia,that there was no reason why the disputed policy should be held to be inviolation of s Act and that S Ltd therefore had an insurableinterest in the contract of insurance between it and the syndicate. In January 2000, the defendants ceased to pay claimssubmitted to them by the syndicate and the syndicate issued proceedings seekingto recover unpaid amounts allegedly due under the reinsurance. The syndicate reinsured its liability under the master lineslip with thedefendant reinsurers. That master lineslip was renewed from time totime. Underthe master lineslip the syndicate agreed to pay fixed benefits to S Ltd inrespect of bodily injury and/or illness sustained by a person (an OriginalPerson) who was engaged in any capacity on board a vessel or offshore rigentered by a member with S Ltd. In June1995, rather than entering into a conventional reinsurance with a Lloydssyndicate, S Ltd and the syndicate entered into a personal accident and illnessmaster lineslip policy to cover the liability of S Ltd to its members. S Ltd, a P&I club,insured the liabilities of its members for personal injury or death. Insurance Lifeinsurance Personal accident and illness insurance Indemnity insurance Master lineslip policy P&I club insured for losses in respect of injuryto any person on board members vessels Insurers paying club fixed benefitsin respect of claims Insurers reinsuring risks with defendant reinsurers Whether club having insurable interest at inception Life Assurance Act 1774,s 1.
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