That which is insured against, is loss arising from marine Definition of casualties. These casualties are in technical language called, sometimes, the perils insured against, and sometimes the risks covered by the policy, expressions which mean one and the same thing, and are employed to signify those causes of loss against the effect of which the underwriter undertakes by his contract to indemnify the assured. The interest of the assured is technically said to be covered by the policy, when the sum or aggregate of sums insured in the policy is sufficient to afford him full compensation for whatever loss that interest may sustain. If the value of his interest exceeds the sum insured, the excess of interest is said to be "uncovered by the policy," and the assured to be "his own insurer to that extent." When the liability of the underwriter commences under the contract, the technical mode of expressing this is by saying that "the policy attaches," or "the risk begins to run," from that time. SECT. II. The Objects and Utility of Marine Insurance. terms. Marine Insu § 3. The great object of Marine Insurance is to promote The objects of the spirit of maritime adventure by diminishing the risk of rance. loss to which it is exposed. This object it effects by diffusing the losses, which would press ruinously upon one individual, amongst a great number of others, who, in consideration of a sum paid to them as the price of the risk they thus take on themselves, engage to indemnify him against the loss he may sustain from any of the casualties which may be expected to occur in the course of a sea venture. The loss of a ship or cargo, if it fell exclusively upon the individual owner, would seriously affect the fortunes of the wealthiest if distributed amongst thirty or forty private underwriters, or borne by a single company of large subscribed capital, it would probably occasion very little inconvenience to those by whom it was paid, while the ship-owner The objects of rance. Marine Insu rance is carried on in this coun try by private underwriters and public companies. Lloyd's. or merchant would receive a complete indemnity, and be enabled to employ in other enterprises the funds, of which, but for this expedient, he would have been entirely deprived. On the other hand, the insurers would be more than repaid by the premiums received on successful adventures, for the loss incurred by those of which the issue proved disastrous; and thus not only is the trade of the ship-owner and the merchant rendered secure by the practice of Marine Insurance, but a separate business, that of the insurers themselves, is maintained by it in considerable prosperity. § 4. The business of Marine Insurance may be carried on either by private underwriters, or by public companies. Until the year 1824 no public companies were allowed to effect sea insurances in Great Britain except the two old companies, the Royal Exchange and the London Assurance, who, from the period of their establishment in the year 1719, had, together with the private underwriters, a monopoly of the whole business of Marine Insurance. This unwise restriction having been removed in the year 1824 (by the Act of 5 Geo. 4. c. 114.), several new companies were formed for the purposes of Marine Insurance in England, Scotland, and Ireland: some of these companies have now ceased to exist, but several, the principal of which are the Indemnity and Mutual Marine, still remain, and have acquired a very considerable share of business. Almost all the private underwriters in this country are members of "Lloyd's;" a name originally derived from a coffee-house in Lombard Street where the London underwriters first began to meet about the middle of last century; and which is now used to denote the general body, or association, of English private underwriters, the members of which in London sit daily for the dispatch of business from ten till four, in a spacious apartment over the Royal Exchange, which, with its adjoining offices and refreshment rooms, is called Lloyd's Subscription Rooms. Lloyd's is, in fact, a regular subscription society, governed by its own rules, and managed by its own committee and Marine Insu rance. chairman; having branch associations also in most of our The objects of great provincial towns, and in some of the principal mercantile emporia on the continent; and keeping up an active staff of agents and correspondents in almost all the known ports of the world, for the purpose of supplying that intelligence which is the very soul of such a business as that of Marine Insurance. The chief difference between the transaction of business Difference in the mode of Lloyd's and with the public companies. at Lloyd's and with the public companies is, that the transacting latter, from the large amount of their subscribed capital, business at can afford to hazard a greater sum upon a single venture than can possibly be done by private underwriters, so that a shipowner, for instance, who wanted to insure 5000l. on his ship, might get an insurance to that amount effected by a single transaction with a company; while he might be obliged to resort to 10 or 15 different private underwriters, each of whom would insure perhaps from 300l. to 500l. on the ship, before he could effect the same object. § 5. In one way or the other, however, the merchants and shipowners of this country have the means of fully protecting their property from every description of loss that can befall them in the course of a sea-venture; and they can only impute it to their own culpable carelessness or unwise parsimony if they do not thus secure themselves from being placed, even by the most disastrous termination of a maritime adventure, in a worse situation than they occupied at its commencement. The system of Marine Insurance, indeed, when conducted on the liberal principles in which it is practised in England and the United States, affords indemnity, not only for all actual damage caused to shipping and merchandise by the operation of sea perils, but also for all interception, by the same causes, of future freight and expected profit. To enlarge on the utility of such a system would indeed be superfluous; even in France, where the amount of protection it affords is less perfect than in this country, the consideration of its advantages drew, not undeservedly, from Security af forded by Ma rine Insurance to the opera tions of com merce. The objects of the Representative of the French Imperial Government, the Marine Insu rance. Principle upon which the business of Marine Insurance is conducted. Mode of calcu mium. following eloquent eulogium: "Le systême des assurances a paru, il a consulté les saisons, il a porté ses regards sur la mer: il a interrogé ce terrible élément; il en a jugé l'inconstance, il en a pressenti les orages; il a épié la politique; il a reconnu les ports et les côtes des deux mondes; il a tout soumis à des calculs savans, à des théories approximatives; et il a dit au commerçant habile, au navigateur intrépide: Certes, il y a des désastres sur lesquels l'humanité ne peut que gémir; mais quant à votre fortune, allez franchissez les mers, déployez votre activité et votre industrie: je me charge de vos risques." (b) SECT. III. - Principle on which Marine Insurance is founded, and Risks estimated. § 6. The most general principle upon which the whole system of insurance depends may be thus stated:- if a series of events of pretty frequent occurrence be observed for a lengthened period of time, it will be found that the number of those events, however apparently accidental, will be nearly equal, in equal periods of time. (c) This principle is the basis upon which the whole business of insurance is carried on, and all calculations as to the amount of premium are founded. The premium, as we have already seen, is the stipulated lating the pre- sum, in consideration of which the underwriter agrees to take upon himself the risk of loss, and to indemnify the assured against it; the rate of premium therefore, or the sum in consideration of which the underwriter can afford to take this hazard on himself, is evidently one of the first subjects to be attended to in the practical conduct of the business of Marine Insurance. (b) Pronounced in the sitting of 8th September, 1807. Boulay-Paty, Cours de Droit Commercial Maritime, tom. iii. p. 234. ed. 1834. (c) M'Culloch's Commercial Dictionary, art. Insurance. Now, suppose it has been remarked, in accordance with the general principle just stated, that out of a hundred ships, of the ordinary degree of sea-worthiness, employed in a given trade, five are annually cast away, the probability of loss upon all ships so employed will be as five to a hundred, or one-twentieth. If an individual accordingly wishes to insure a ship, or the cargo on board a ship engaged in this trade, he ought to pay, and the underwriter to receive, a premium equal to one-twentieth of the sum he insures, exclusive of such extra sum as may indemnify the underwriter for his trouble, and leave him a fair profit: if the premium exceed this sum, the underwriter will be overpaid; if it fall below it, he will be underpaid. (d) Premium stated at so The premium, therefore, is generally fixed at so much per cent. on the sum which the underwriter agrees to insure, or much per cent. upon the total value of the property which the assured wishes to protect by the insurance. Thus, premiums are currently said to be at 4, 5, 10, or 15 per cent. upon certain risks; by which is meant, that the sum which the assured must pay the underwriter for insuring property exposed to such risks is 4, 5, 10, or 15 per the amount insured. cent. upon Thus, when the underwriters for every 100l. they agree to insure on a ship or cargo engaged in the Baltic trade require 51. to be paid to them by way of premium, the mercantile phrase is, that premiums are 5 per cent. on Baltic risks. § 7. The premium or price of the risk being the sole consideration in respect of which the underwriter engages to indemnify the assured against loss, it is plain, on the clearest principles of equity and good sense, that he can only be bound to afford such indemnity to the extent of, or in proportion to, the sum which he agrees to insure, and upon which the premium is calculated at a certain per-centage. Hence it is an elementary principle of insurance law, which, pervading the whole system, cannot be enforced too (d) M'Culloch's Commercial Dictionary, art. Insurance. |