INSURANCE 1.7 ASSIGNMENT
Connotes the transfer of rights and obligation to a third party.
:: Where there is an assignment of the subject matter of insurance (I.e. the property insured), the insurance policy lapses/terminates because the insured no longer has insurable interest in it. For the policy to remain valid, the Subject matter of the contract of insurance (money) must also be assigned-Ecclesiastical Commissioners V Royal Exchange Assurance Co. Since the subject matter of the contract of insurance is a chose in action, it can be transferred. Notice to the insurer shall determine priority.
:: Assignment of the Policy: the insured can transfer the benefit of the insurance policy to the assignee of the subject matter of insurance with the consent of the insurer (life and marine insurance may be transferred unilaterally. i.e. no consent needed). Such consent should be written if the assignee of the policy wishes to enforce it in his own name. The parties can (by agreement) dispense with the need for notice. The assignee who wishes to have priority should give notice of such assignment to the insurer-Section 61. As priority is determined by the date when the insurer receives notice of assignment-Section 64.
Assignment by operation of the law: where the policy holder dies, his policy becomes assigned by operation of the law to his PRs or Legatees. Also where the insured becomes bankrupt or liquidated, his policy is automatically assigned to the trustees.
EFFECTS OF ASSIGNMENT: the assignee steps into the shoes of the insured. He can claim rights of the insured… conversely defences available against the insured can be raised against the assignee.
SETTLEMENT OF INSURANCE CLAIMS.
The general public regard insurers as willing to collect premiums but hesitant to settle claims.
Note that public policy may prevent settlement of certain illegal, immoral or repugnant claims (ex turpi causa non oritur actio). The courts would not enforce contracts that are contrary to public policy. This has been applied in Beresford V Royal Insurance Company, where the parties agreed that the life policy would be honoured even if the assured commits suicide (sane or insane). Court said no. Also applied in W.H. Smith V Clinton, where the insurer contracted to indemnify the insured against any libel that may arise from the publication of his paper ´vanity fair’. Court said no. See also Gray V Barr, Bedford Insurance Company V IRB.