There had been indications that the long-awaited Third Parties (Rights against Insurers) Act 2010 (the Act) would finally come into force in April of this year. However, we understand from the Law Commission that the revised estimate for commencement is now “summer”; October at the latest.
The purpose of the Act is to make it easier for claimants to pursue insurers directly in circumstances where a defendant insured has become insolvent:
- Where an insolvent person/company is covered by a liability policy, it removes the need for separate proceedings to establish the insured party’s liability before suing the insurer, thereby reducing time and costs.
- Insurers will be under a duty to give full disclosure of detailed information about policy terms to claimants within 28 days of request. This will permit claimants to anticipate any coverage defences that the insurer might raise and make an early decision of the likelihood of success.
The Act did not come into force in 2010 because the government realised that it was defective regarding certain insolvency matters. These defects were partly rectified by Section 20 and Schedule 2 of the Insurance Act 2015 but subsidiary legislation adding certain insolvency events which will trigger the application of the Act is still required before it can come into force. The delay has been caused by difficulties in finding space in the legislative calendar for the proposed regulations to be debated and passed.