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Claiming against insurers of insolvent defendants just got much easier

After years of delay, on 1 August 2016, new legislation came into force with the aim of making it easier to bring direct claims against an insurer, when those it insured became insolvent – potentially reducing the costs of litigation.

The ‘new’ law & where it applies

The Third Parties (Rights against Insurers) Act 2010 (referred to below as the”2010 Act”) was bought into force in the UK to replace and address some of the limitations of its 1930’s processor.

The 2010 Act applies in all cases where the insolvency started after 1 August 2016 irrespective of when the liability accrues.

The old 1930 Act continues to apply to cases where both the insolvency started and the liability accrued prior to 1 August 2016.

Claims process 

The third party can issue proceedings directly against the insurer and resolve all issues, including that of liability, within the same set of proceedings.  If the insured company has been struck off the Register of Companies, there is now no need to restore it before a claim can be commenced.

Availability of information 

Claimants now have earlier access to information regarding insurance policies, so they can make an informed decision on whether or not to proceed with litigation.

Information can now be requested from any person that the third party reasonably believes is able to provide it – including brokers, insurers, former employees and insolvency practitioners/official receivers.

Time limits

There is a 28 day time limit within which the above documents must be provided. Failure to do so will allow third parties to apply for a court order requiring compliance, as well as a costs order against providers of information for failing to meet the deadline.


The requirements to disclose information are largely the same as giving pre-action disclosure, although no ongoing duty of disclosure is imposed. However, it is not clear whether multiple requests for information could be made, which it is suggested would be akin to imposing an ongoing duty of disclosure.

Documents no longer in the insurer’s control can be requested and insurers must provide information about these documents and who has the relevant information. The owner must be able to easily provide the requested information.

Overall, the third party will not be in a better position than it would have been, had the business been solvent.

You can access a copy of the 2010 Act here.

For more information on this, advice on any aspect of a business or commercial dispute, please contact a member of our commercial disputes team or call us on 0115 9 100 200.

This is not legal advice. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Posted on August 29, 2017

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