is surrounded. At page 7 of their Preliminary Report, the Commissioners say:"The difficulty of limiting the amount insurable is very great, and the policy of such a course is doubtful. It is almost impossible to accurately fix the value of a ship, and any attempt to limit the amount of insurance in proportion thereto would be impracticable." Further information induced the Commissioners to modify this opinion. "The present system" (of marine insurance) "tends to encourage carelessness and to increase disasters. It allows considerable deviation from the fundamental principle of indemnity. It not only relieves the shipowner of all pecuniary risk, but even enables him to derive a profit from shipwreck. In other cases it deprives the shipowner of an indemnity when he ought to be protected."-Final Report, pp. 11-14. The Commissioners came, therefore, to a distinct conclusion as to the danger and mischief of over-insurance, and they did not hesitate to suggest that policies should be void when the loss of a ship is occasioned by the negligence or default of the owner or his agents. But beyond this they refrained from recommending remedial legislation—Firstly, because they thought the Legislature "should not interfere with contracts made by persons who are capable of taking care of their own interests ;” secondly, "because it is desirable that the law of insurance should be, as far as possible, the same amongst all commercial nations," and, therefore, before legislating, it would be important to obtain information as to the practice of foreign States in this regard; and, thirdly, because "any alteration in the law of insurance should be made with the greatest care, lest the insurance business be driven abroad." The Government, with the fixed intention apparently of promoting legislation on this subject, have lost no time in obtaining from the nine leading maritime States their views on the law and practice of marine insurance. Without going into details of the replies received, it is sufficient to state that by the marine insurance law of all the countries in question the policy of insurance is regarded as a contract of indemnity only, and must not be converted into a source of profit to the assured. It is true, however, that in France, as in England and the United States, valued policies, whether on ship or freight, cannot be opened except on an allegation of fraud. So far, therefore, as the establishment of the general principle on which marine insurance rests, and no doubt ought to rest, the Government, in urging legislation, proceed on safe ground. But there are difficulties which present themselves in the way of legislation on this subject, and which suggest the probability that, whatever law may be passed for regulating marine insurance, it may be evaded if both parties to the contract are so inclined.

The prospect of approaching legislation on this important question has produced a good deal of intelligent criticism, and we may specially refer

to an article in the Law Magazine for November, and to another in the Economist of the 20th of that month, as affording good specimens of the able manner in which this question is handled by leading members of the press. One omission, however, we observe in the arguments of our contemporaries-they both point out and dwell upon the interest which the shipowner has in over-insurance in ship and freight, but they omit to notice the interest the underwriter has in maintaining the present system of valued policies, and the difficulty which the existence of that interest presents to any effective change in the present law. Mr. Justice Willes, with that sagacity which distinguished all his remarks on the operations of commercial law, hit this point in his well-known "Memorandum on Valued Policies," written in 1867." It may be questioned," "It said that learned judge, "whether any alteration in the English law would be operative, unless the underwriters were sincerely disposed to aid in giving it effect, and it may also be questioned whether they do not think it more for their interest, as increasing the amount of premiums, that the present system should continue." Mr. W. W. Rundell, Secretary to the Liverpool Underwriters' Association, was one of the witnesses examined before the Royal Commission :-"The proposal to limit insurance to a fixed proportion of value," he said, "is considered impracticable by underwriters. I see no chance of making it work.” * Mr. Rundell's views were sustained by every subsequent underwriter examined, who contended, one and all, that to open values would be to involve both parties to the contract of insurance in profitless litigation. No doubt, as Mr. Justice Willes has said, the increase in the amount of premiums is a potent consideration with the underwriters in supporting the present system of insurance; but it is not the only one. There are also the considerations of general and of particular average. Captain John Fenwick (of Messrs. John Fenwick and Son), examined before the Commission, said :-" Underwriters like a ship to be over-valued, because then a partial loss does not so easily reach 3 per cent. of the sum insured, below which proportion they are not liable, and because it lightens each man's share in a general average; besides, it adds to their premiums."† "I am aware," said Mr Lamport, the eminent Liverpool shipowner, "that underwriters like a high valuation, because advantageous to them in a case of general average." The reason in both cases is obvious. By the memorandum contained in every Lloyd's policy, the ship and freight are warranted free of average under £3 per cent., unless general, or the ship be stranded. If, then, a ship be insured for £10,000, the

* Unseaworthy Ships' Commission, Minutes of Evidence, vol. 1.

+ Unseaworthy Ships' Commission, Minutes of Evidence, Qs. 870-2, 997, 998. Ibid. 5738-42.

damage must, under this warranty, amount to £300 before the underwriters can be liable, whereas, if the property be valued in the policy at £5,000, they would be liable for damage if amounting to £150. Then as regards general average, where the three interests of ship, cargo, and freight contribute in a common ratio for a loss occasioned for the common benefit-if the loss is represented by, say, £1,000, and the ship, cargo, and freight are valued respectively at £5,000, £10,000, and £1,000, it is obvious-that whatever the percentage which each interest would pay on adjustment, it must be twice as much as if the value were respectively £10,000, £20,000, and £2,000-the amount of the loss being in this example a constant quantity-besides which the number of underwriters increase with the values insured, thereby diminishing the liability of each particular underwriter. The insurer has, therefore, an inducement as strong if not stronger than the shipowner in over-insurance. His trade is insurance, it is his daily business, and is, of course, based upon some calculation of profits. What he gains the shipowner and the merchant must pay. Over-insurance means increased premiums, and, as we have shown, decreased liability of the underwriter in cases of average particular and general. It need not be wondered at therefore that the underwriters should be favourable to the existing state of things, and should deprecate any change in our law of insurance. Opposition, however, to an amendment of the existing law on the part of underwriters, or of the assured, or of both combined, would furnish no sufficient argument against such an amendment if the Legislature is satisfied, as the Royal Commission undoubtedly was, that overinsurance, by making the assured indifferent to the safety of their property and even occasionally giving them an interest in its loss, has a direct tendency to increase maritime disasters. Assuming that this is so, let us see what are the remedies proposed. The writer in the Law Magazine proposes that the underwriter should, in all insurances on ship or freight, be allowed to open the policy, so as to prove the actual value of the subject matter of the insurance. "Let," he says, "the admitted principle that a marine policy is only a contract of indemnity have its full effect, and let the underwriter be liable in all cases, for no more than the actual value of the ship or freight insured, on certain definite and fixed principles." "An underwriter," says the writer in the Economist, "might be allowed to open the valuation of policies on hulls of ships and be entitled to succeed if the excess is considerable or material. In the case of a policy or freight, an owner might be allowed to receive his gross freight after deducting what may have been advanced to him before his ship sailed, and the wages, port charges, and other expenditures not incurred in consequence of the casualty; and in cases of ships going in ballast to another port, either seeking a freight or to take up a charter,

the owner might be allowed to recover by insurance the actual expenses which such a voyage had entailed upon him up to the time of loss." Now, it must not be forgotten that the Act prohibiting wagering policies, (19 Geo. 2, Cap. 37) was passed for the express purpose of giving effect to the principle of indemnity in policies of insurance. It renders null and void all assurances, "interest, or no interest, or without further proof of interest than the policy, or by way of gaming and wagering, or without benefit of salvage to the insurer"-this is the wording of the statute. But it is the fact that the passing of this Act was the immediate and direct cause of the system of valued policies. There can be no doubt that a policy which covers a ship in excess of her actual value when the contract is entered into, or at the time of loss, or under which a shipowner recovers a larger amount in the name of freight than the freight at risk, is, as to that excess, a wager policy and a contravention of the existing law. But the valued policy does this. Yet these policies have, since the time of Lord Mansfield, been upheld by our Courts of Law. The valuation must stand, and the parties are estopped from altering it, unless mala fides is alleged, and this, if proved, simply voids the policy; in that case, it was never a contract. How is this? Because both parties to the insurance contract have conspired to defeat the law. "The things that have been are the things that shall be." We fear, if a law were passed to-morrow enabling the assurer to open the policy, that by means of "honour policies," or by some other contrivance, a way would be found to evade its provisions. Again, the sagacious warning of Mr. Justice Willes comes back upon us, that any change in our law of insurance must depend for its effect upon the sincere co-operation of the underwriters. The deep interest they have in the maintenance of the existing state of things, forces the conviction that any amendment in the law, designed to protect the principle of indemnity, must be framed in well-considered and imperative terms, and even then there will be no security that it will prove effective. We firmly believe that shipowners, as a body, do not value highly the opportunity which the law presents for over-insurance. It means to them increased expenditure, and, in these days of keen competition, an owner's insurance account is sometimes a very serious item in the cost of carrying on his business. Any arrangement which would tend to reduce this cost would be most welcome to owners of shipping property, and a very satisfactory exchange indeed, for the chance of selling a ship to the underwriters for a third more than her value, or for a similar chance of recovery in the name of freight, which was never at risk. If, then, there is likely to be any opposition to a legislative proposal to open policies of insurance (an amendment in the law which, if it can be carried out, will be, undoubtedly, beneficial); we do not believe it will come from the assured, for the simple reason

that they would gain by the inevitable reduction in the cost of insurance. But whatever change may be effected in the law relating to the opening of values, it will not produce, even with the aid of underwriters, the desired result so long as our mode of litigating insurance claims remain unchanged. "Insurance trials," say the Commissioners in their Final Report (pp. 11-14), " before a jury are extremely unsatisfactory; a judge assisted by two assessors would be far better." A reform in this respect would unquestionably secure the support of the underwriting bodies. It is very difficult, indeed, to obtain a verdict for the defendants in an assurance case, even from a special jury, unless where there is clear evidence of concealment, misrepresentation, or some other form of mala fides. Juries seldom understand these cases; they go upon the broad principle that there has been a contract, and a consideration, that the contingency insured against has occurred, and that the underwriter is bound to pay. We quite agree that a competent commercial lawyer, assisted by competent assessors acquainted with the practice of insurance and the operations of the carrying trade, would be a far more satisfactory tribunal than any now existing; and we should hope that, in any proposal to amend our law of marine insurance, this suggestion of the Commissioners will be duly considered. To sum up our views, as shadowed out in the preceding observations,-We have no doubt that the practice of over-insurance has a direct tendency, in so far as it produces neglect or indifference on the part of the assured, to increase disasters at sea. We know of course that this practice is promoted and fostered by the rule of law which forbids the opening of valued policies. We do not doubt that legislation on this subject is demanded; but we conceive that to be effective it must have the cordial co-operation of the underwriters, who are more concerned than the assured in the proposed amendment; and we are quite sure that any change in the law of marine insurance would be incomplete and defective which does not provide a special tribunal for the trial and settlement of insurance claims. With such a machinery the difficulty of adjusting values when opened (now almost insuperable), if it would not disappear, would be readily overcome, and the principle of indemnity would become in practice as it is in theory-the foundation of the contract of insurance. We know that in this matter we are in accord with the leading maritime states. We trust, therefore, that the approaching session of Parliament will witness a resolute attempt on the part of the Government (whom we believe to be quite in earnest in this matter) to amend to this extent, at least, our law of insurance-always bearing in mind that there are two parties to the contract. So shall they, in the language of Blackstone, "aid in advancing the great system of marine jurisprudence, of which the foundations have been laid, by clearly developing the principles on which policies of insurance are founded."