Draft regulations were laid before Parliament on 25 February 2016 to amend the Third Parties (Rights Against Insurers) Act 2010
The Act, when it comes into force, will make it more straightforward for claimants to cut through directly to insurers when policyholders become insolvent. It has been six years since the Act was passed. These proposed amendments are another step on what has been a slow road towards bringing the Act into force.
The proposed amendments were needed as the Act as drafted was narrower in scope than the 1930 Act, failing to cover certain insolvency events. The amendments address the circumstances in which an insured becomes 'insolvent' for the purposes of the 2010 Act, expanding it to include dissolved corporate or unincorporated bodies and certain specific insolvency circumstances, for example, insolvency under Part 2 of the Banking Act 2009 and administration under certain sector specific administration provisions.
The draft regulations also provide that former officers or directors, insolvency practitioners or official receivers will have to cooperate with third parties by providing documents relevant to the insolvent insured’s liability.
So when will the long-awaited 2010 Act come into force?
The Regulations now need the approval of both Houses of Parliament. Once this happens, the government will announce the commencement date of the Act, as amended by both the Insurance Act 2015 and the Regulations. The date needs to be at least three months after the Regulations have been made. Could 12 August 2016 - the date the Insurance Act is due to come into force - be a realistic timeframe? Time will tell: we'll keep you posted.