Safeguarding Commercial-vehicle Insurance
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ONE of the Bills now before the House of Lords deals with the very important matter of the winding up of insolvent insurance cornpanies, including those concerned in the business of motor-vehicle insurance. • The Road Traffic Act, 1930, compelled all motorists to insure against third-party risks. This naturally led to a huge increase in the :number of policies. A clause in the Act provided that a company undertaking this business should deposit a sum of 1.15,000, which was considered to be some proof of its financial status, and motor users bought policies quite freely, thinking that a form of Government guarantee lay behind them. Several failures, however, soon altered this opinion, and there are still outstanding claims to the value of many thousands of pounds which have not been met by certain insolvent concerns. The deposit, even if made available for the settlement of claims, would, in such cases, prove entirely inadequate. A single claim may amount to several thousand pounds, and the position of a policy holder who is called upon for such a sum as the „result of an accident and whose liability is not met by his insurance company, may be a tragic one, whilst the injured party may receive little or nothing in consequence. The new Bill seeks to permit the Board of Trade to obtain additional information to that appearing in the statutory accounts, and thus enable the Board to form a bet+ er opinion as to the financial position of a company. A clause provides that a petition for the winding up of a company which is unable to pay its debts within the meaning of the Companies Act, 1929, can be presented by the Board of Trade only with the leave of the Court. This is a safeguard that a prima facie case of insolvency shall be shown before the petition for winding up is advertised in accordance with the existing rules of the Court_