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Third Parties (Rights against Insurers) Act 2010

The long awaited Third Parties (Rights against Insurers) Act 2010 (“the Act”) comes into force on 1 August 2016.

The Act introduces a simpler and cheaper procedure for claiming directly against the insurer of an insolvent individual or corporate defendant. This reflects the reality of the litigation where legal liability insurance is in place, which is that claims against defendants are often handled by their insurers.
Why has it taken so long?
The Act in its original form did not fully address certain insolvency, administration or dissolution situations. In order to correct this, provisions were included in the Insurance Act 2015, and on 25 February 2016 draft regulations were put before Parliament.
What does this mean for claimants?
Once it is in force, the Act will allow for the following:

  • The ability to notify the insolvent defendant’s insurers directly of an insurance claim.
  • Early disclosure of insurance arrangements – including whether or not there is a need for an application to court.
  • With regard to a corporate defendant, a claimant will be able to issue proceedings directly against the insurers without having to restore the company to the register first.

In summary, the Act signifies a major departure from the current system and will help creditors where possible to recoup losses in a more efficient way.
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