In Allianz Insurance Co Egypt v Aigaion Insurance Co SA – Butterworths Law Direct 11.9.08 the Claimant was an insurance company incorporated in Egypt. The Defendant was a reinsurer incorporated in Greece. According to the Claimant, in March or April 1995, the Defendant agreed to reinsure 30% of the cover provided by the Claimant in respect of a fleet of tugs. The reinsurance was said to have been effected through brokers incorporated in Cyprus. In July 2005, one of the vessels became a total loss. The Claimant sought payment of $US675,000 which was said to be the Defendant's share of the loss. The Defendant denied liability. It contended, first, that there never had been a concluded contract between the parties. Secondly, even if there was such a contract, it contained a warranty to the effect that instalments of premium would be paid in the amounts and by the dates specified in a policy sent by the Defendant to the brokers in mid-April 1995 and, there having been no such payments made, the cover had terminated automatically prior to the casualty. It was agreed that the insured had suffered the casualty and had been indemnified by the Claimant. It was further agreed that, if the Defendant had been on risk at the time of the casualty, it became liable to the Claimant in the sum claimed. In fact, the Claimant had paid the relevant instalments to the brokers but the brokers had failed to pass them on to the Defendant.
The issues included whether, on the facts, there had been a concluded contract as alleged arising from the exchange of correspondence between the parties, and whether, if there was a contract in the terms alleged by the Defendant, s 53(1) of the Marine Insurance Act 1906 provided that the Defendant was to be treated as having received the instalments because of the payments to the broker.
The court ruled that, on the facts, there had been a contract as contended by the Claimant, arising in April 1995, and the claim would therefore succeed. It held that the wording of s 53(1) of the Marine Insurance Act 1906 is clear. It procures a situation in which, absent agreement to the contrary, the insurer may look to the broker for payment of the premium.