1. Third Parties (Rights Against Insurers) Bill Owen Gorman Director; Delta Claims Services Limited

2. Summary • 1930 Act & current position • Hopes/Fears and Bankruptcies • Objectives • Proposals • Impact on Insurers • Observations • Next steps

3. Current position • Common Law position - Insurance funds added to pot for other unsecured creditors • 1930 Act transfers Insured’s rights to TP • Issues: • TP to establish liability against Insured • Restoration of dissolved company • Recover against Insurer • Expensive, cumbersome & a deterrent

4. Fears & Bankruptcies • UK Bankruptcies (incl. IVA’s) 134,142 • 2006 “record” figures 107,288 • 2010 believed to on track for new record! • Complex nature of 1930 Act benefited in blocking/steaming access to Insurers funds • Another intervention not provided for in premium considerations?

5. Objectives of Bill • Easier to access compensation from insolvent defendants • Less expense in doing so • Single stage proceedings against Insurer • Greater access to Insurance policy information • Need to restore defunct company removed

6. Proposals – TP rights • Statutory transfer of rights to access Insurer • Limit on rights transferred as per 1930 Act • No restoration of company required • Access to policy information expanded • Insurers, Brokers, Company etc. • Insured’s liability clarified to be only those sums not covered by policy

7. Proposals – Insurer rights • Defences as per 1930 Act except • Condition for Insured to “do” something can be satisfied by TP • Continuing info & co-operation from Insured does not apply where Insured cannot comply • “Pay 1st” clauses do not apply to TP • Outstanding Premiums can be offset

8. Proposals - scope • Wider application to alternatives to insolvency including voluntary procedures • Applies to voluntarily incurred liabilities e.g. Legal expenses, health & car repair Insurances • UK jurisdiction choice of own domicile or that of Insurer regardless of policy

9. Impact on Insurers • Increase in Third Party claims • Cost savings to balance this? • Increase in requests for information: Admin burden • This may lead to greater duties on the part of the TP to present prompt, meritorious claims?

10. Practical observations • Has anything really changed in practice? • Insurers views – generally relaxed • Investigation problems from increase in business failures – not specifically the Bill • Debtors to business versus Third Parties – does this reflect fairness? • Removes posturing and tactical positioning

11. Next steps • 1st Presented to Parliament 23/11/09 • Committee stage ended 9/2/10 • Report stage & 3rd reading start 22/2/10 • Part of new House of Lords procedure • Then House of Commons 5 part procedure • Similar Bill 7mths but...General Election! • CILA’s role