Changes to Third Parties (Rights against Insurers) Act 2010

01 August 2016

The Third Party (Rights against Insurers) Act 2010 as amended by the Insurance Act 2015 and the Third Parties (Rights against Insurers) Regulations 2016 came into force 1st August 2016.

The 2010 Act replaces the Third Parties (Rights against Insurers) Act 1930 and now allows a third party to issue proceedings directly against a liability insurer where it’s insured has become insolvent.

Previously the third party had to issue proceedings against the insured which meant the insured company had to first be restored on the register of companies where it had previously been struck off due to its insolvency.

The 2010 Act also allows the third party to request specific information about the insurance policy in order to assist them in deciding whether it is worth the risk of entering to litigation. 

This information may be sought from inter alia the broker, insurer or even former employees who are authorised to hold policy information. Once requested the information has to be provided within 28 days. If the requested party is unable to provide the information ‘without undue difficulty’ then they have to explain why. Failure to provide may allow the third party to apply for a court order.

Please note that the 1930 Act will continue to apply in the event the liability incurred and the state of insolvency entered had taken place before 1 August 2016. 

It is envisaged that although the new Act may increase the number of claims brought by third parties it may reduce the number of speculative claims given the opportunity to interrogate the likelihood of policy engagement.

For further information, please contact Mike Johnson, Head of the UK Contractors team on +44 20 7528 4759 or email mike_johnson@jltgroup.com