SOUTH AFRICAN LAW
It has been pointed out that South African law inherited the English law of insurance (including the rules on insurable interest).
Following the example of English courts, the principle of patrimonial indemnity has been emphasized in earlier local decisions dealing with indemnity insurance.11 Despite the high incidence of life assurance there is no decision from this period which specifically dealt with insurable interest in the context of non-indemnity (life) insurance.
7 See Feasey v Sun Life Assurance Corp of Canada 2003 Lloyd’s Rep (IR) 637 (CA) 657.
8 note 7. See p 659.
9 Clarke The Law of Insurance Contracts 4th ed par 3-6D.
10 Birds & Hird Birds’ Modern Insurance Law 5th ed p 46. See also Havenga 1999 TSAR 630 633.
11 See Reinecke et al par 109.
In 1977 the legislature repealed the colonial legislation that imported English law of insurance.12 This has been interpreted to mean that the Roman-Dutch law of insurance has been restored as our common law in respect of insurance matters13 but English influence is still very strong.
Turning to Roman-Dutch law, it is clear that Roman-Dutch law did not entertain a doctrine of insurable interest comparable to the English doctrine.14 The authorities simply emphasised that a contract of insurance is a contract to transfer a risk threatening the patrimony of the insured.
This implied that the insured must prove an interest upon the insured event in order to prove that he has in fact suffered a loss. Life assurance was not really present in the minds of the institutional writers and indeed some writers created the impression that life assurance was prohibited.15 This assessment of insurable interest fully conformed to the views expressed in the lex mercatoria.
Insurable interest was therefore not an independent requirement for the validity of a contract of insurance. Roman-Dutch law contented itself with the ban on wagers in order to deal with wagering under the cloak of insurance.
Not much direct assistance can therefore be derived from Roman-Dutch sources on the nature of interests amenable to life insurance.
Since the 1977 legislation nothing much has developed on the front of insurable interest except that the inherited concept of insurable interest has been judicially challenged in the context of indemnity insurance.16 However, there still is no leading decision dealing with insurable interest in the context of life assurance.
South African textbooks generally expound and repeat the English rules on insurable interest necessary for life insurance.17 Some important aspects of the English rules on insurable interest have indeed become firmly entrenched by trade usage and no turn-around seems possible, e.g. the rule that a person may insure his or her own life and that of his or her spouse for any amount he or she deems appropriate. On the
12 Pre-Union Statute Revision Act 43 of 1977.
13 Mutual and Federal Insurance Co Ltd v Oudtshoorn Municipality 1985 1 SA 419 (A).
14 See Havenga The Origins and Nature of the Life Insurance Contract in South Africa with Specific Reference to the Requirement of Insurable Interest (thesis, 1993) ch 3; Reinecke par 103.
15 See Havenga ch 3.
16 See Phillips v General Accident Ins Co of SA Ltd 1983 4 SA 652 (W); Steyn v AA Onderlinge Assuransie Assosiasie Bpk 1985 4 SA 7 (T). See Reinecke et al par 101.
17 Cf Reinecke et al par 85.
other hand, some important matters must after the repeal of the provincial ordinances be considered as being open. Thus the question may be asked whether the existence of an actual insurable interest at the time of contracting is a separate requirement in law for the validity of a true contract of insurance? May a future interest for instance be insured on condition that the interest materialises before occurrence of the insured event?
Perhaps the most important open question is whether the interest in the life of another must necessarily be of a pecuniary nature.
Why should abstract interests be excluded from insurance cover? Is it not merely an unnecessary limitation of contractual freedom and an needless obstacle in the way of legitimate insurance business? If abstract interests do qualify,
what interests will be regarded as sufficient for this purpose? An ancillary question is whether it is sufficient if the interest existed at the time of the contract but not thereafter. There can after all be no question of the transfer of a risk (as is required for true insurance) once the interest in the insured event has ceased to exist.
In the absence of common law authority and case law, we must deal with these questions in terms of the general principles of South African law but cognisance must also be taken of the developments in comparable jurisdictions.
To this end a cursory overview of certain modern laws must be obtained.