The parties to a contract of insurance are the ‘Assured’ (or ‘Insured’) and the ‘Insurers’.
1. The assured (or insured)
Any person who is capable of contracting may be the assured under a contract of insurance. Thus, a minor may enter into a contract of insurance if it is for his benefit; otherwise, the contract will not be binding upon him. Similarly, a contract of insurance made by a person of unsound mind or drunken person is, in certain circumstances, voidable.
2. The insurers
Two classes of persons carry on insurance business, insurance companies and underwriters.
(a) Insurance Companies
The power of an insurance company to enter into insurances of any particular kind depends upon the terms of its memorandum of association or other instrument constituting it.
1. Clements v London and North Western Rly Co (1894) 2 QB 482, CA.
2. Imperial Life Insurance Co v Charlebois (1902) 22 CLT 417 (life insurance), where a minor whose health was not good insured his life for a large sum at a premium which absorbed nearby the whole of his income, and it was held that he was entitled to avoid the policy.
3. Imperial Life Assurance of Canada v Audett (1912) 20 WLR 372 (life insurance), where a proposal from signed when the proposed assured was drunk, to the knowledge of the insurers’ agent, was held not to be binding.
4. An association of more than 20 members (other than solicitors, accountants or members of a stock exchange) formed for the purpose of carrying on business, having for its object the acquisition of gain, is unlawful, unless incorporated: Companies Act 1985, s 716 (l), (2). The Secretary of State may by regulations in a statutory instrument provide that subs 1 is not to apply to the formation, for a purpose specified in the regulations, of a partnership of a description so specified: ibid, s 716 (3). See Great Britain 100 AI SS Insurance Association v Wyllie (1889) 22 QBD 710, CA (marine insurance), approving Ocean Iron SS Insurance Association Ltd v Leslie (1887) 22 QBD 722n (marine insurance) and distinguishing United Kingdom Mutual SS Assurance Association Ltd v Nevill (1887) 19 QBD 110, CA (marine insurance). If, however, there is no association for the purpose of carrying on business, and all that is done is that certain persons receive subscriptions out of which they pay certain benefits and at the end of the year distribute balance among the members, the association is not illegal: Re One and All Sickness and Accident Assurance Association (1909) 25 TLR 674.
5. The memorandum of association may be altered: Companies Act 1985, s 4, Re National Boiler Insurance Co (1892) 1 Ch 306. See generally R R Pennington, Company Law (5th Edn), pp 78-84.