Third Parties (Rights Against Insurers) Act 2010

The Third Parties (Rights Against Insurers) Act 2010 received the Royal Assent on 26 March 2010, having sailed through Parliament unamended from the form in which it was presented in November 2009. The 2010 Act was the result of Law Commission Report No 272 published in 2001, which highlighted the shortcomings of the existing legislation, the Third Parties (Rights Against Insurers) Act 1930, and made various recommendations for its reform. The 2010 Act closely follows the Law Commission’s 2001 draft bill, but has updated it to reflect changes in insolvency law in the intervening period. The Act is likely to come into force in about a year’s time, and will apply to all cases other than those in which both the insolvency of the assured and the occurrence of the event giving rise to liability occur after the appointed day.

Background

The 2010 Act seeks to ensure that the victim of a wrongdoer (normally, but not exclusively, a tortfeasor) has a direct claim against the wrongdoer’s liability insurers in the event that the wrongdoer becomes insolvent. That means that the very claim which has generated the insurance monies is satisfied by them, and that the monies do not go to pay off the assured’s general creditors. The 1930 Act was originally devised to accompany the compulsory motor insurance regime introduced by the Road Traffic Act 1930 but since 1934 there has been a separate direct claim mechanism for motor insurers (with an additional direct action right being added in 2003), so the 1930 Act, and now the 2010 Act, apply to all liability claims other than motor.