Legal News

Simpler, cheaper compensation claim procedure proposed in new Bill
Thu 26th Nov 09 - 11:30

Making it easier and less expensive to claim compensation from insolvent defendants is the aim of a new Bill put before Parliament today.

The Third Parties (Rights Against Insurers) Bill proposes that claimants should be able to sue the insolvent defendant's insurer directly without having to sue the wrongdoer first.

This changes the current legislation, passed in 1930, that requires claimants to establish the wrongdoer's liability before bringing a separate claim against their insurer.

Justice Minister Bridget Prentice said:

'This change will make it easier and cheaper to claim compensation from insolvent defendants.

'It is essential, particularly in the current climate, that victims are able to settle rightful compensation claims in as inexpensive and unstressful a way as possible – even if the wrongdoer has gone bust.

'The insolvency of an individual or company should not make it more difficult for claimants to recover full compensation for their loss.'

The Bill would:

• reduce time and costs because separate proceedings would no longer be needed to establish the insured's liability before suing the insurer
• give claimants a right to obtain insurance policy information quicker in order to establish the likelihood of success
• clarify the law in cases where a foreign company is involved
• remove the legal requirement for a dissolved company to be restored to the register of companies.

This is only the second Bill to be introduced straight to the House of Lords, as part of a trial procedure designed to simplify the passage through Parliament of Bills arising out of Law Commission proposals (the first was the Perpetuities and Accumulations Act 2009 which received Royal Assent earlier this month). It is proposed that the Bill would apply across all of the United Kingdom.

Maria Penny, Solicitor at Ralli comments on the article: "This is excellent news for Claimants in cases where the third party is either dissolved or service would prove problematic. 

In many cases issuing proceedings against the Defendant can be a difficult process and currently if a Defendant company is dissolved they have to be restored to the register of companies before proceedings can be issued and served against them.  This poses a real risk in cases involving limitation issues and is often very costly and time consuming.

The possibility of obtaining insurance details by way of right would also be extremely useful although the MOJ do not confirm, as yet, how the details would be obtained. 

In road traffic accident cases insurance details can be obtained via the Motor Insurers Database if the registration number is known but in cases other than road traffic no such system is in place.  It may be possible to insert details of the liability insurer on the Companies House website alongside the other information provided, and this would ensure claims are dealt with swiftly whilst at the same time keeping costs to a minimum.

In cases involving Industrial Disease this would resolve the issue of trying to trace the Defendant company, (and subsequently their insurers) who may have ceased trading many years before the claim is brought. 

This is an issue Ralli will follow with keen interest."