Mark Pring and Claudia Gwinn examine the Third Parties (Rights against Insurers) Act 2010, focusing on 2025 decisions relating to notification of conditions precedent (Makin v QBE; Archer v R ’N’ F Catering) and disclosure requirements (AmTrust v Endurance). They highlight practical points regarding, in particular, ensuring compliance with policy terms and using “extended disclosure” applications to address “information asymmetry.”
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Intro: Hello and welcome to Insured Success, a podcast brought to you by Reed Smith's insurance recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at [email protected]. We'll be happy to assist.
Claudia: Welcome back to Insured Success. I'm Claudia Gwynn, an associate in Reed Smith's Insurance Recovery Group, and I'm joined today by my London colleague, partner Mark Pring. Today, we're looking at the UK third party's Rights Against Insurers Act 2010, and in particular, three 2025 decisions that both mark the limits of the 2010 Act and clarify the procedural tools available to third-party claimants seeking to recover in relation to their claims against the relevant policyholder. These cases highlight, on the one hand, restrictions on third-party claimants who, subject to policy terms, can find their ability to recover is dependent on a policyholder defendant taking certain actions, and, on the other hand, a willingness by the courts to relax certain procedural hurdles to level the playing field and assist third-party claimants. So, Mark, could you give us some background on the 2010 Act and its purpose?
Mark: Many thanks, Claudia. Well, the 2010 Act is in principle there to facilitate recoveries by third parties against a liability insurer where the policyholder is in some form of insolvency. So, broadly, when a policyholder suffers what's referred to as a qualifying insolvency event and owes a liability to a third party, and that liability is covered by an insurance policy, then the policyholder's rights against its insurer in respect of that liability can transfer under the statutory scheme to the third party. Now, this being the law, there are provisos to this. So that transfer will take place, provided that the third-party claimant can broadly prove two things. That they would have succeeded in their claim against the policyholder, and that under the terms of the policy, the insurer would be liable to indemnify the policyholder for its liability to the claimant. Since coming into force in 2016, the Act has modernized the previous 1930 statutory regime, which I recall, even back in 1994, I was advocating should be reformed. And this is in particular in two important ways. First, the new-ish Act enables streamlined recovery by allowing third-party claimants to sue insurers directly and to determine both liability and coverage in one action without first suing an insolvent company or even restoring to the companies register a dissolved policyholder. Secondly, it enhances transparency through affording information rights so that third-party claimants can access information at an early stage about the policy from the policyholder, its broker, or its insurer. Even now, though, the limits of the 2010 Act regime are still being tested before the courts, as I think we shall see, Claudia.
Claudia: Yes, thank you, Mark. So turning now to the 2025 cases, a key theme that seems to stand out is notification. So let's first discuss Macon and QBE.
Mark: Sure, of course. If I can give a little bit of background, in this case, Mr. Macon suffered a stroke following an assault by door supervisors employed by ProTech. Mr. Macon issued proceedings against first the restaurant where the assault took place and secondly ProTech itself as the employer of the two doorman. ProTech was insured under a security and fire protection insurance policy. Then following ProTec's liquidation, its insurer QBE was joined to the action under the 2010 Act. QBE argued it wasn't liable to Macon because ProTec had failed to notify QBE of Macon's claims in accordance with the terms of the policy. So looking at the policy, it contained clear notification language requiring notice as soon as practical but in any event within 30 days of any bodily injury or incident that may give rise to a claim. The High Court held that this wording operated as a condition precedent.
Claudia: And what tipped this clause into condition precedent territory?
Mark: Yep, that analysis can be tricky, but in this case, the court focused on the mandatory framing of the notification requirement in the policy and the express consequence of non-compliance. The insurer would be, as the policy indicated, entitled to refuse to deal with the relevant claim. On that basis, the claim failed, ProTech had not notified QPE in accordance with the terms of the policy, and to interpret the clause otherwise would the court consider go against commercial common sense.
Claudia: Right, so even though the breach wasn't the third-party claimant's fault, the results did.
Mark: Exactly. Yeah, it's a stark reminder that the Act transfers rights. It doesn't rewrite the policy as such. So if the policyholder, the insured, has already lost its rights through breach of a condition precedent, a 2010 Act claimant takes no better title, as it were, than that which the insured would have held.
Claudia: Thanks, Mark. So, I understand that the same issue arose in Archer and R&F Catering Limited. How did the court deal with notification there?
Mark: It did broadly arise in a similar fashion. In Archer, the claimant fell seriously ill after a meal and sued R&F. The company later entered into voluntary liquidation and its insurer, Riverstone was joined to the proceedings thus far similar to Macon. The court accepted that various conditions precedent had been breached in that in particular one the policyholder failed to give notice as the policy required as soon as reasonably possible of an event that could give rise to a claim and secondly the policyholder failed to provide full details and evidence of the claim within 30 days of the circumstances, giving rise to the claim, again as required. Even though Ms. Archer had first notified RNF of her illness in November 2019 and subsequently instructed her solicitors to write to RNF on several occasions, including requesting RNF's. After submitting a letter of claim to R&F on 30 October 2020, R&F only then notified its insurer on Riverstone on 17 November 2020, so a year after the first notification by Miss Archer in relation to her illness. In addition, R&F only engaged with Riverstone's claims Handler's information requests that had first been submitted in July 2021, in October 2022. The court held in particular that the pre-November 2020 communications were clearly circumstances requiring notification and that the policyholder repeatedly ignored reasonable requests. So ultimately the result was the same as in Macon. The condition precedent or precedence was breached, and the claim for coverage was defeated.
Claudia: So, taking these cases together then, what do you think are the practical takeaways?
Mark: Yeah, well, certainly the court adopted, and to an extent this was no surprise, a contract-led approach in both decisions. They refused to impose on insurers liabilities broader than those that they had agreed to assume. Key word there being agreed. For potential third-party claimants, the practical message is to interrogate the insurance position early and seek confirmation from insurers, the defendant insureds, that claims and potential claims have been notified to their insurers promptly and in accordance with policy terms. I'd say it's also particularly important that such third-party claimants seek confirmation that any conditions precedent have been complied with in order to preserve their third-party rights, given what we've just heard in the two cases.
Claudia: Thanks, Mark. So now let's turn to the third case. It's a case that went the other way and highlights the court's willingness to intervene in support of the third party claimant's rights under the 2010 Act in certain circumstances. What did the Court of Appeal decide in Amtrust and Endurance?
Mark: Yeah, this is definitely interesting, and that's not to say the other cases weren't. Amtrust concerned whether pre-inception communications and materials passing between the insurer and the policyholder, the insured, could be disclosed to a third-party claimant under the 2010 Act to assist with policy construction and coverage issues. The Court of Appeal granted the application for extended disclosure. Emphasizing that the relevant court practice direction for those interested PD 57 AD imposes no threshold test of relevance. So disclosure, the court felt, is a multi-factor proportionality exercise with relevance being one factor among many. The court held that pre-contractual documentation, such as proposals, broker notes, placement materials, can be disclosable, especially where the policy includes an incorporation clause or, for instance, references information seen and agreed, indicating that such materials may bear on policy construction. Crucially, the court recognised that the information asymmetry in this case, the insurer had the file, the third-party claimant did not. That asymmetry weighed in favour of disclosure.
Claudia: So it seems that when there are genuine construction issues, third-party claimants should be confident in seeking extended disclosure of pre-inception materials.
Mark: Exactly. I mean, everything depends on the specific circumstances. And this is a rare intervention by the Court of Appeal in case management, but it does signal support for third-party information rights under the 2010 Act scheme. The flip side, I guess, is that policyholders should assume that pre-contractual documentation and placement communications may be disclosable under 2010 Act litigation and they should accordingly maintain clear and accurate records.
Claudia: Thank you, Mark. Before we finish up, do you have any final observations or takeaways for our listeners?
Mark: I do. The 2025 decisions we've been discussing, to my mind, reinforce that the 2010 Act provides a bridge, if you like, towards the insurers, but it's not an automatic guarantee of recovery for third-party claimants. For such claimants, I think the priorities are first to establish the insurance position early, ensure that any policy conditions affecting cover can be satisfied as a consequence, and secondly, where appropriate, to tie any disclosure requests to construction issues arising out of the policy that are likely to be informed by pre-inception materials and therefore justify any application for the same to be disclosed. For policy holdings, be alert to policy triggers and timelines and maintain, again, clear and accurate placement records on the basis that they may be scrutinized later.
Claudia: Mark, thank you so much and to our listeners for joining us today. If you have any questions about anything we've discussed, please contact me or Mark Pring at [email protected].
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