SUBROGATION LETTER: THE MATERIALIZATION OF THE TRANSFER OF RIGHTS AND REMEDIES TO THE MARINE UNDERWRITER

The letter of subrogation could be defined as a written document which materializes the respect of the obligation of guarantee of the marine cargo underwriter to his insured, whose cargo got damaged during transport operation. The materialization is expressed here by the payment of indemnity of the insurer to the insured and therefore the transfer of the rights to claim of the insured, victim of the damage to his underwriter who will turn against the main author of the damage or loss.

The subrogation letter contains some mandatory information to be formal. This information is notably:

• The date of establishment,
• The name and information of the insured and that of the insurer,
• The amount received,
• The signature of the insured,
• The phrase mentioning the concretization of the payment and transfer of the rights and remedies of the insured to his marine cargo insurer, from whom he received payment.

However, it is to note that the date appears of the document as it permits to realize the time of the contract establishment and its validity regarding the period under which the insurance contract was established. Same as, it is equally important that name of the parties to this subrogation should be mentioned. In marine cargo insurance, two parties make the subrogation action and thus the names which are to appear are that of the insured transferring its rights and that marine cargo underwriter, receiving those rights.

Being a commercial company, the name of the marine cargo insurer must be the name of the insurance company he represents. The name of the insured in the other side could vary regarding it could a physical person or a corporate body. In either way, it is to note that the name of both parties must clearly be mentioned on the said document. The name is thus an identifier when read is easy to know the parties which intervened during the operation. The contact as the address of the parties are equally information which appear in the subrogation letter.

In addition, another element and not the least that is the subject of mandatory mention is the amount of the transaction or the amount which was paid as compensation. It must appear on the letter of subrogation. The settlement amount shown on this document is the basis of the subrogated marine cargo insurer’s claim. The insurer cannot and must not in any case claim for an amount more than what he himself paid to his insured; he must be able to justify to the third part he thinks being the true author of the damage that he compensated his insured for the amount he is claiming for, which is the amount stated on the subrogation letter. As the insurance contract is not an illicit enrichment transaction for each of the parties, the subrogated marine cargo underwriter cannot claim for an amount which is higher than the indemnity amount; it is not redundant to recall here that the surplus or extra amount stated here is completely different from the damage and interest that could be at court.

Also, the signature of the insured materializes his agreement to receive the amount proposed to him by the insurer as compensation. The signature is also a sign of authentication of the document, there is no better way to give consent than to sign. That is why the latter is inevitably an important and even indispensable mention of the letter of subrogation. It is therefore an element that materializes the approval by the insured of the amount that his marine cargo insurer has paid. On the letter of subrogation that materializes the transfer of the rights of the insured to the subrogated insurer there is often a sentence mentioned therein. Generally speaking, it simply means that the insured now approves the payment of the insurance indemnity as compensation for the damage he has suffered; and assigns his rights and remedies to his marine cargo underwriter. This assignment confers to his beneficiary, all the privileges that the insured could use to be compensated for the damage he has suffered.