Ministry of Justice
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Simpler, cheaper compensation procedure proposed in new Bill

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

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.

Notes to editors

1. Dates for the passage of the Third Parties (Rights Against Insurers) Bill will be posted on the UK Parliament website.

2. For more details, contact Ministry of Justice press office on 020 3334 3536.

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