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Third Parties (Rights Against Insurers) Act 2010

Third Parties (Rights Against Insurers) Act 2010. Owen Gorman Director: Delta Claims Services Limited. Summary. 1930 Act & previous position Hopes/Fears and Bankruptcies Objectives Key changes Impact on Insurers Observations Bill procedure – unique Trial Procedure. Previous position.

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Third Parties (Rights Against Insurers) Act 2010

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  1. Third Parties (Rights Against Insurers) Act 2010 Owen Gorman Director: Delta Claims Services Limited

  2. Summary • 1930 Act & previous position • Hopes/Fears and Bankruptcies • Objectives • Key changes • Impact on Insurers • Observations • Bill procedure – unique Trial Procedure

  3. Previous 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 Act • Easier access to 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. Key changes – 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. Key changes – 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. Key changes - 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 Act • Debtors to business versus Third Parties – does this reflect fairness? • Removes posturing and tactical positioning

  11. Bill Procedure • First presented to Parliament 23/11/09 • Committee stage ended 9/2/10 • Report stage & 3rd reading started 22/2/10 • Part of new House of Lords procedure • Then House of Commons 5 part procedure • Royal Assent 25 March 2010 • CILA’s role

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