JOINDER OF INSURERS BY CLAIMANTS AND INSURED

  1. Introduction

In practice insurers will conduct the defence of litigation by a third party claimant against an insured and will settle any judgment against the insured but they reject any attempt to join them directly as a defendant in the action. However, a third party claimant or the defendant insured who knows that the insurer will indemnify the insured for amount of the judgment may seek to join the insurer as a co-defendant so that the judgment may be enforced directly against the insurer. We now examine whether a third party claimant or defendant insured has a legal right to join an insurer as a co-defendant in an action against the insured.

  1. Section 68 Insurance Act 1997

The now repealed provisions of section 68 of the Insurance Act 1997 clearly gave a third party claimant the legal right to join an insurer directly in actions against an insured. Section 68(1) of  the Insurance Act 1997 stated that, “Where a third party is entitled to claim against an insured in respect of a risk insured against, he shall have a right to join the insurer of that risk in an action against the insured in respect of the claim.” The provisions of this section were first enacted by the Insurance (Special Provisions) Act 1988. See, Unity, Life & Fire v Ladega (1996).

The provisions of section 68 of the Insurance Act 1997 which gave third party claimants the legal right to join insurers directly in actions against an insured can no longer be found in the Insurance Act 2003. In effect they have been impliedly repealed and there no longer exists any legal right for a third party claimant to join an insurer as a co-defendant in an action against an insured.

  1. Section 69 Insurance Act 2003

The provisions of section 69(1)(b) of the Insurance Act 2003 states that, where a judgment is obtained against an insured by a third party claimant, the insurer shall pay the amount of the judgment to the third party entitled to the benefit of such judgment within 30 days, notwithstanding that the insurer may be entitled to avoid or cancel the policy. Section 69 of the Insurance Act 2003 does not give a third party claimant a legal right to join an insurer in claims against the insured. Therefore, there is clearly no longer any statutory authority for the joinder of an insurer in an action by third party claimants against an insured.

Section 69(1)(b) of the Insurance Act 2003 is similar to section 10(1) of the Motor Vehicle (Third Party Insurance) Act 1950 and both sections impose a statutory duty on an insurer to settle the amount of any judgment obtained by a third party claimant against an insured. This means that an insurer cannot place a maximum limit of liability for death or personal injury to third parties. Rather, the insurer must settle the claim for the full amount of the judgment obtained against the insured. This position has been discussed in Lawfields Insurance Advisory No.1.

  1. Judicial Authority

Generally, courts in Nigeria have leaned against the joinder of an insurer as a co-defendant in action by a third party claimant against an insured. In New India Insurance v Odubanjo (1971), the Supreme Court held that the third party claimant did not have the right to join the insurer in an action against the insured because there was no privity of contract between the claimant and the insurer. See also, Mecury Assurance v Ajufo (1978), where the Supreme Court held that the defendant insured did not have the legal right to join the insurer as a co-defendant in an action brought by the third party claimant.

In UBA v Achoru (1987), the Supreme Court held that the defendant insured did not have the legal right to join an insurer as a co-defendant in an action by the third party claimant. Agbaje JSC clarified the law on this matter,

“It is however clear to me that the plaintiff in an action of this nature can have no claim against the insurers of the defendant (insured). So the insurance company could not have been joined by the plaintiff as a co-defendant in this action.”

  1. Conclusion

Therefore, it is clear that both statutory and judicial authority do not give a third party claimant the legal right to join an insurer as a co-defendant in an action against the insured.

However, where the defendant insured seeks to join the insurer he can only do so by way of third party procedure and join the insurer as a third party and not as co-defendant. The Supreme Court said in both UBA v Achoru and New India Insurance v Odubanjo, that an insurer can be joined as a Third Party (not a defendant) in an action against the insured on the grounds that the insurer has a statutory duty to indemnify the insured for the amount of the judgment.