Daily Insurance Industry News
 
 
Daily Insurance Industry News
Sunday 21st of January 2018
March 29, 2010

New act eases the path for third party claimants

by Gill Montia

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The Law Commission has reported that the Third Parties (Rights against Insurers) Act 2010 has received the Royal Assent.

The act reforms the Third Parties (Rights against Insurers) Act 1930 under which, if an insured became insolvent, a third party could not proceed against them but had to join the group of general creditors in the hope of recovering their losses.

The body has also recently published an “issues paper” considering whether an insurer should be liable for a policyholder’s loss suffered as a result of a late or non-payment of an insurance claim.

At present, the English case of Sprung provides that a policyholder cannot recover for such losses, even if the insurer wrongfully refuses to pay out on time and the policyholder goes out of business as a result.

The Commission believes insurers should be liable for the consequences of late payment in appropriate cases, and is suggesting a reform to the insurer’s post-contract duty of good faith, so that an insurer would be liable in damages for an unjustified refusal to pay out.

Responses to the paper must be in by 24th June 2010.

 

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