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

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

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

Fears & Bankruptcies UK Bankruptcies (incl. IVA’s) 134, “record” figures 107, 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?

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

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

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 1 st ” clauses do not apply to TP Outstanding Premiums can be offset

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

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?

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

Next steps 1 st Presented to Parliament 23/11/09 Committee stage ended 9/2/10 Report stage & 3 rd 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