The Third Parties (Rights against Insurers) Act 2010 received Royal Assent more than two years ago, on 25 March 2010, but it has still not been brought into force. The commencement date has to be fixed by an order and the government has not found time for this as yet. In the Lord Chancellor’s report to parliament last month, he noted the need for two small amendments to the Act and some new rules of court. He concluded that it is unlikely that the Act will come into effect before 2013.

Given the length of the delay, we can be forgiven for forgetting what the Act seeks to achieve. It implements a number of changes to the Third Parties (Rights Against Insurers) Act 1930, in order to help claimants to recover compensation from an insolvent defendant’s insurer. Critically, it will no longer be necessary to bring proceedings to establish the liability of the defendant. The 1930 Act will be repealed save for cases where both the defendant’s insolvency and the liability to the third party occurred before the commencement date of the 2010 Act.  


The government’s recent Report on the implementation of Law Commission proposals contains the following illuminating statement:

“The government’s current focus is on dealing with the severe economic situation, which has unfortunately meant that very worthwhile but less immediately pressing law reform projects have, in some cases, been delayed”.

The Third Parties (Rights against Insurers) Act 2010 is one of the projects that has been delayed (again). The Law Commission reviewed the 1930 Act and published a final report and draft bill in 2001, and the bill was approved by the government in 2002. Given its relevance to the plight of claimants adversely affected by the insolvency of defendants, it is hard to think of legislation more closely linked to the current economic situation. True, it does not directly reduce the government’s legal spend, but assisting such claimants, who might have to fall back on state support if they are unable to obtain compensation, can only be a good thing for the public coffers.

The Consumer Insurance (Disclosure and Representations) Act 2012 was implemented using the relatively new House of Lords procedure for Law Commission bills. This speeds up the process for uncontroversial bills such as this one and the bill which became the Third Parties (Rights against Insurers) Act 2010. The 2012 Act is only one small part of the English and Scottish Law Commissions’ programme of reform of insurance contract law, as illustrated in this flowchart on their website. The real question is whether the government will support the implementation of the parts of the programme concerned with business insurance. It also remains to be seen how long it takes for both the 2010 and 2012 Acts to be implemented.

This is the current state of play regarding business insurance:  

  • Consultation paper on Post-contract duties and other issues. This reviews topics covered in the previous issues papers and includes damages for late payment, insurers’ remedies for fraud, insurable interest, and policies and premiums in marine insurance. The consultation period is closed;
  • Anticipated consultation paper on business insurance and warranties. This will cover pre-contract non-disclosure and representations in business insurance, and the law of warranties in business and consumer insurance. It will also review the tricky issues concerning micro-businesses, discussed in Insurance Update June 2009. It should be published later this year;
  • The Law Commissions plan to publish a final report dealing with both of these consultations by the end of 2012 or early 2013;
  • A draft bill will be published in 2013. This will conclude the project.