On 1 August this year, despite almost 20 years after the Law Commission first talked about this provision and five years since this Act was passed through Parliament, The Third Parties (Rights Against Insurers) Act will come into force.
The Act will update the Third Parties Act (1930) and will be of particular relevance to the construction industry. The Act will enable individuals to take direct action against insurers and will assist a third party in receiving compensation for losses caused by an insolvent person, or company who has liability insurance.
The key changes introduced by the 2010 Act are:
- A third party claimant will be able to bring claims directly against insurers without first being required to bring proceedings against the insured to establish liability;
- There will no longer be a need for dissolved insurers to be restored;
- Third Parties will be able to make an informed decision at an early stage in the process (as to whether it is worthwhile investing time and money in pursuing recovery from an insolvent company’s insurer);
- The procedural steps for third party claimants have been reduced;
- New, clearer and stricter rules apply to the provision of policy information to the third party claimant. A statutory duty now exists on insurers, brokers and former directors of the insured to provide defined information relating to policy;
- There is a 28 day deadline for responding to any request for information; and
- Limitations have been imposed on the policy defences which insurers are able to rely upon.
The Act will be particularly beneficial for:
- Claimants who have suffered at the hands of an insured party that becomes insolvent before any claim is successfully made against them for their wrongdoing;
- Claimants with a long tail disease - they will be able to sue the insurer of his previous employer direct, even if the employer has gone out of business;
- Claimant’s suffering from mesothelioma (asbestos) - they will no longer have the time and expenses of ‘resurrecting’ the employer’s company himself. In the past, given the time sensitivity of this condition, this delay has often been critical for people suffering from this.