The Insurance Act 2015 has made the small, but necessary, changes to the 2010 Act that the government considered were required before bringing into force. Once it is brought into effect, claimants are likely to find it easier to bring a claim against an insured’s insurance policy, where the insured is insolvent. A comparison of the old and new processes for obtaining information from a third party’s insurers, and pursuing claims against that insurer directly, are set out here.

1. 1930 Act 2010 Act
Solvent insured purchases insurance policy
The third party considers bringing a claim against insured
that is, or becomes, insolvent
Third party rights to information
The third party can obtain limited details from the
insurer about the insurance policy after the
insolvency of the insured (First National Tricity
Finance Ltd v OT Computers Ltd [2004])
Third party rights
If the third party establishes liability against the insured and
establishes that the insurance policy responds to that liability, the
third party can make a recovery directly from the insurer. However:
i. the insurer may rely on defences that would have been available to
the insured if it had remained solvent (e.g. limitation and contributory
negligence); and
Ii. the third party will not be put in a better position than the insured
would have been under the policy.
The insured’s prior compliance with policy terms and the applicable
excess will be taken into account.
Has the
insured been
struck off
the
Companies
Register?
The third party issues
proceedings against insured
Third party must obtain
judgment against insured
Third party must apply to
restore the insured to the
Register
Once restored, the third
party issues proceedings
against insured
No Yes
Solvent insured purchases insurance policy
The third party considers bringing a claim against insured
that is, or becomes, insolvent*
Third party rights to information
The 2010 Act clarifies what information the third party is
entitled to about the insured’s insurance policy. The third
party may request the information below, from any person
who can supply it. If that person fails to provide the
requested information within 28 days, the third party may
apply to court for an order requiring disclosure.
The information that can be requested includes the identity
of the insurer, the policy terms and limits, whether the claim
has already been notified and whether there are ongoing
proceedings between the insurer and insured (and if so,
details of those proceedings).
The third party can at this stage bring proceedings directly
against the insurer for a declaration of both the insured’s
and the insurer’s liability, without first having to establish
that the liability of the insured has been crystallised.
Third party rights
If the third party establishes liability against the insured and
establishes that the insurance policy responds to that liability,
the third party can make a recovery directly from the insurer.
However:
i. the insurer may rely on defences that would have been
available to the insured if it had remained solvent (e.g.
limitation and contributory negligence); and
Ii. the third party will not be put in a better position than the
insured would have been under the policy.
The 2010 Act has also codified that while, the insured’s prior
compliance with policy terms and the applicable excess will
remain relevant when considering an insurer’s liability, the
insurer cannot rely on an insured’s breach of the policy terms if
the third party’s actions would have amounted to compliance,
had they been undertaken by the insured.
Terms which the insured would be unable to comply with (i.e.
because it is dissolved), such as providing assistance and
information to the insurer, will not be taken into account.
Has liability of the insured been crystallised? e.g. by
settlement or judgment
Only at this stage can the insured
bring proceedings against the
insurer
No
Yes
The Third Parties (Rights against Insurers) Act 2010 will soon come into force, replacing the 1930
Act of the same name. This will make it easier for third parties to claim directly against an
insolvent defendant’s insurer. We compare the position under the old and new rules in respect of
corporate insolvencies below.