People nowadays know what they can expect from an average adjuster – but it was not always so!
Lord Justice Mansfield in his judgement in Lewis v Rucker in 1761 said that he “endeavoured to get what assistance I could by conversing with some gentlemen of experience in adjustments”.
This type of informal arrangement did not, however, meet the needs of a growing marine and insurance industry. Weskett’s scathing comments in his Complete Digest of the Theory Laws and Practice of Insurance, published in 1781, referred to: “unskillfullness, negligence and error” and despaired that “….litigation is become so rife, there is necessity, however strange it may appear, for the almost daily attendance, which may be observed, especially in term time, of no less than four or five Attornies at Lloyd’s Coffee-House! What a degradation is this of mercantile character and abilities!”
The first known professional average adjusters, William Benecke and Robert Stevens, practised in the City of London from 1800 onwards. Other adjusters followed, but it is difficult to identify them because there was no defined profession of average adjuster. They described themselves variously in directories as merchants, accountants, insurance brokers, solicitors or arbitrators; not until 1840 did the Post Office London directory give a classified entry for the profession.
The first formal association of the individual average adjusters practising in the UK took place in 1869, at the prompting of the underwriting members of Lloyd’s and the Liverpool Underwriters Association. When average adjusting as a separate profession was in its infancy, there was very little in the way of established law to guide the practitioner, and consequently many points of practice had to be decided in accordance with custom. Some of these customs were subsequently ratified by legal decisions, but others were disapproved. This uncertainty and inconsistency meant there was a danger that the profession would fall into disrepute.
The initial purpose of founding the Association in 1869 was to arbitrate on disputed adjustments. To this end the Association maintained an office at Lloyd’s. However, it would seem that the scheme was little used. Therefore, the Association redirected its attentions to “The promotion of correct principles in the adjustment of Averages and uniformity of practice amongst Average Adjusters and the maintenance of good professional conduct”.
With its new objectives, the Association’s first task was to consider the areas of divergency in practice, and determine how the various so-called “customs” could be brought together into a uniform, if not universal, practice. This aim was largely achieved by the Association in the first fifteen years of its existence by a two-fold approach: the collection and refinement of the Customs of Lloyd’s and the adoption of Rules of Practice, relating to the adjustment of averages and the duties of adjusters.
Members of the Association also played a leading role in the search for international uniformity in the adjustment of General Average which resulted in the first York-Antwerp Rules of 1877. Members of the Association have continued to play a prominent role in the evolution of the York-Antwerp Rules.
The Association has always played an important part in various London market committees, and was closely involved in the formation of the International Hull Clauses and the revision of the Institute Clauses for Builders' Risks. It also has strong relationships with international associations and insurance markets.