Insolvency of ISG – Maximising Insurance Recoveries for Employers

In the wake of ISG’s insolvency, it is vital that Employers utilise the Third Parties (Rights Against Insurers) Act 2010 (the “2010 Act”) to maximise their recoveries on ISG contracts, particularly in relation to design related disputes. 

The 2010 Act allows an Employer who has a claim against ISG, to pursue that claim directly against ISG’s insurers following its insolvency. By doing so, an Employer may see substantial recovery on claims that might otherwise only see a pence in the pound recovery from the insolvency estate. This avenue is only available where ISG had insurance against the claim in question. For a contractor like ISG, this will mostly likely be relevant to design / specification related claims Employers have, which ought to be covered under ISG’s PI insurance – although other classes of relevant claim could include injury / property damage claims that fall under public or employer liability policies and product liability claims.

It is vital that Employers act quickly to enforce their rights under the 2010 Act against ISG’s insurers:

• Liability policies invariably have finite limits of liability. Generally speaking, they pay out on a first come first serve basis. Therefore, delays in raising claims may see the insurance exhausted by other Employers’ claims.
• Obtaining the information necessary to both (i) assess the insurance position; and (ii) prove ISG’s liability can be challenging given the change of control to the Administrators. That position can worsen as the administrators sell assets, thereby dispersing ISG’s information and records.
• Employers need to be mindful of the limitation periods applicable to their claims.   

Burges Salmon’s specialist insurance policyholder team has extensive experience of pursing claims on insurance contracts under the Third Parties (Rights Against Insurers) Act 2010 and construction insurance disputes generally.