s.9Transfer of rights of insured against insurer on bankruptcy
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Section 9Part 0 —

Transfer of rights of insured against insurer on bankruptcy

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Where, under any contract of insurance, a person (hereinafter referred to as "the insured") is insured against liabilities to third parties which he may incur, then —
in the event of the insured becoming bankrupt or making a composition or arrangement with his creditors; or
in the case of the insured being a company, in the event of a winding up order being made, or a resolution for voluntary winding up being passed, with respect to the company, or of a receiver or manager of the company's business or undertaking being duly appointed, or of possession being taken by or on behalf of the holders of any debentures secured by a floating charge, of any property comprised in or subject to the charge,
if, either before or after that event, any such liability is incurred by the insured, his rights against the insurer under the contract in respect of the liability shall, notwithstanding anything in any other law to the contrary, be transferred to and vest in the third party to whom the liability was so incurred.
Where an order is made, under section 66 of the Bankruptcy Law (1997 Revision), for the administration of the estate of a deceased debtor according to the law of bankruptcy then, if any debt provable in bankruptcy is owing by the deceased in respect of a liability against which he was insured under a contract of insurance as being liability to a third party, the deceased debtor's rights against the insurer under the contract in respect of that liability shall, notwithstanding anything in the said law, be transferred to and vest in the person to whom the debt is owing.
Insofar as any contract of insurance made after the 8th May, 1991, in respect of any liability of the insured to third party purports, whether directly or indirectly, to avoid the contract or to alter the rights of the parties thereunder upon the happening to the insured of any of the events specified in paragraph (a) or (b) of subsection (1) or upon the making of an order under section 66 of the Bankruptcy Law (1997 Revision) in respect of his estate, the contract shall be of no effect.
Upon a transfer under subsection (1) or (2), the insurer shall, subject to section 12 be under the same liability to the third party as he would have been under to the insured, but —
if the liability of the insurer to the insured exceeds the liability of the insured to the third party, nothing in this Law shall affect the rights of the insured against the insurer in respect of the excess; and
if the liability of the insurer to the insured is less than the liability of the insured to the third party, nothing in this Law shall affect the rights of the third party against the insured in respect of the balance.
This section and sections 11 and 12 shall not apply where a company is wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company.

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