When in 2010 the then government passed the Third Parties (Rights Against Insurers) Act, which was intended to replace the 1930 statute of the same name, few would have thought that it would take over six years for the legislation to be implemented. It is now coming into effect on the 1 August 2016.
The Act is relevant where a claimant has a claim against a defendant who is insured against such a claim but subsequently becomes insolvent. It applies whether the insured “person” is an individual who for example is subject to a voluntary arrangement or bankruptcy order or a company which has gone into administration, provisional liquidation or is being wound up voluntarily or by virtue of a court order.
Essentially in this situation the rights of the insured to make a claim on their insurance policy are transferred automatically to the claimant. This means that the claimant can now take direct action against the insurer and avoid having to get involved potentially in two sets of proceedings: the first against the insured person and then once liability has been established in those proceedings a second action against the insurer unless of course by that stage the insurer has decided to settle.
In a lot of cases the cumbersome requirement of possibly two sets of proceedings has probably resulted in the unjust situation of an insurance company having accepted a premium for a policy not having to pay out even though a claim has been made which is covered by the policy!
In addition both the insured and the insurance company are now required to provide information to the claimant about the insurance policy namely who the insurer is; what the terms of the policy are; whether the insurer has claimed not to be liable under the policy; whether there have been any proceedings in relation to the validity of the policy and whether there are any limits on the funds available to meet claims against the policy. If for example there is professional indemnity insurance it may be that there is an overall limit on the amount which the insurer can be forced to pay out in respect of all claims within a given period and there will almost certainly be an excess. Clearly it is important for a claimant to know that before starting any court action.
Train delays are a common feature of modern life. Whatever points or signal changes have now occurred to allow this train to continue on its journey it is certainly to be welcomed.