The Enterprise Bill: Payment of Insurance Claims - James Gibbons, Browne Jacobsen LLP
28/10/15. The Enterprise Bill (“the Bill”) was published in September 2015 and contains provisions which, if enacted, would imply terms into all insurance contracts that require an insurer to pay sums due to insureds within a reasonable time. The changes are likely to have the most significant impact on first party loss policies. However, any crystallised loss indemnified under a liability policy will also be affected meaning all insurers and their advisers will have to consider the impact of the Bill.
Background
English law has been reluctant to follow the lead of other common law jurisdictions and has generally been reluctant to allow the recovery of consequential damages for late payment of insurance claims. The English courts have long considered contracts of insurance to form a promise by an insurer to hold an insured harmless against loss, meaning that the payment of a claim under a policy is deemed to be a payment of damages in itself.
To rectify what is objectively a legal oddity, and with the reforms brought about by the Insurance Act in mind, the concept of requiring prompt payment of insurance claims has risen up the political agenda. Provisions catering for such a change were included in the original drafts of the Insurance Act 2015 but were removed on the Act’s journey through parliament to ensure that the Insurance Bill (as it then was) maintained its “uncontroversial” status, so as to benefit from the...
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