Payment of the premium

Section 53 of the Marine Insurance Act 1906 sets out a rule which, by any standards, is anomalous. The section provides that the premium under a marine policy is to be paid by the broker and not by the assured. The rule has its origins in 18th century market practice and has created a number of legal and practical difficulties. In their eighth Issues Paper, published in July 2010, The English and Scottish Law Commissions have proposed the abolition of the rule. Responses to the Issues Paper are requested by 19 October 2010.

The existing law

In the ordinary law of agency the agent does not (subject to contrary agreement) undertake personal responsibility to the third party to pay sums due from the principal. That rule is reversed by s53(1) of the 1906 Act, which provides that: