NSW reforms third-party claims

New laws allowing third party claimants to recover directly from insurers has come into force in NSW from 1 June.

The Civil Liability (Third Party Claims Against Insurers) Act 2017 resolves the uncertainty created by section 6 of the Law Reform (Miscellaneous Provisions) Act 1946, requiring charges over and priorities in relation to insurance money.

Among other things, the new laws provide a claimant can recover an insured amount directly from an insurer under circumstances, and recovery by the claimant discharges any liability of the insurer to the insured in respect of the liability.

The insurer is entitled to rely on the same defences it would have as if the claim was by the insured.

The new Act does not allow recovery against a reinsurer.

The NSW Law Reform Commission called for this reform in its review of third party claims on insurance money review in 2016.