"New" Third Parties (Rights Against Insurers) Act and what corporates need to know
Big change for insurers - as a result of two key statutes which come into force this year.
The Third Parties (Rights Against Insurers) Act 2010 and the late payment provisions in the Insurance Act 2015 changes are set out on our recent Regulatory and Risk blog. Below is a brief summary for our corporate readers.
Third Parties (Rights Against Insurers) Act 2010
The Act has made it possible for a third party potential claimant to commence proceedings directly against insurers without restoring an insolvent company to the register.
From a practical point of view, insurers and brokers (amongst others) should now be prepared to respond to requests to provide detailed information relating to a policy to third party potential claimants. This will likely involve updating their systems, policies and providing training on the stricter rules imposed by the Act. They should also ensure that any outsourced service providers are equally prepared. Failure to comply with a request could result in a costs order against the insurer or broker by the court.
Insurance Act 2015 - late payment of insurance claims
Last year, we reported on the risks of retrospective reviews of claims handling procedures arising out of the FCA's thematic review of claims handling for SMEs. The review, which found that there was a gap between the actual claims services and SME's expectations, has prompted a late amendment to the Insurance Act 2015 - insurers now have a duty to pay sums due under a policy within a reasonable time, or otherwise face claims for damages.