THIRD PARTY INDEMNITY INSURANCE. (Hansard, 17 April 1928)

§ Mr. ATKINSON

I beg to move, That leave he given to bring in a Bill to provide for the direct discharge of third party liability by insurers. The object of this Bill is to secure the position of a person who has suffered injuries and has a claim for damages due to the negligence of another who is insured against liability for such a claim. There are two main classes of persons who will benefit by the Bill. The first class consists of those 21 persons injured by the negligent driving of motor vehicles and, the second, workmen who are injured by the negligence of employers—negligence such as defective machinery or the absence of fencing which is a breach of the Factory Acts. Most employers and most drivers of motor cars are insured against this liability. Indeed, we know that there is a demand for compulsory insurance in the interests of persons who may be injured, but the trouble is that even if the defendant is insured there is no security that the injured person will get his money, or if the injured person is killed that those who are dependent on him will get that to which they are entitled. This is inevitably the position if the defendant becomes bankrupt, or in the case of a company if it goes into liquidation, before the claim is paid.

This was brought home to us in a rather striking way by a case in the Court of Appeal the other day. A man had been seriously injured and had recovered damages for the injuries, but before he was paid the company went into liquidation. The company was insured, and the insurance company handed over the money to the liquidator of the company, but the liquidator, instead of handing it over to the injured person, claimed that the money had become part of the general assets of the company; that the injured person had no right to it and was only in the position of a general creditor and must prove like any other creditor. With great regret, the Court of Appeal were driven to uphold this view, and, therefore, although the insurance company had paid the money, the injured person lost his claim and got nothing out of it. Even apart from bankruptcy, the insured person can always claim that the insurance company shall pay him, that is the employer or the motor-car owner, but if that is done there is no guarantee that the injured person will ever get his money. Suppose some wholly irresponsible person driving a motor cycle half kills someone and has a judgment against him for £1,000. He has a right to demand payment by the insurance company to himself, but there is nothing to compel him to hand over that money to the injured person. The injured person is only in the position of an ordinary creditor and 22 may never receive a single penny of the money to which he is entitled.

The position was in part dealt with by the Workmen's Compensation Act, in so far as claims arise under that Act. Section (4) provides that in the case of a bankruptcy or the winding up of a company the insurance company shall pay direct to the injured employé. That recognises the principle for which I am contending, but it only applies to claims for compensation under that Act. It does not apply to claims at Common Law or under the Employers' Liability Act, so far as workmen are concerned, nor does it apply to claims for negligent driving of a motor vehicle. This Bill provides that it shall be the duty of the insurance company, in so far as they are liable, to pay claims direct to the injured person. It does not, of course, entitle the claimant to take proceedings against the insurance company for the purpose of establishing liability or the amount of the liability, but once the liability is agreed, or is established by judicial proceedings, the insurers are to hold the money in trust for the injured person and are under an obligation to pay that money over direct. I do not suggest that the Bill should apply to claims under the Workmen's Compensation Act, because that position is dealt with under the Act of 1925. I hope the House will give favourable consideration to the Bill and will grant leave to introduce it.