Enterprise Act 2016: What does this mean for the insurance market?
Insurers now have an obligation to pay valid claims within a reasonable period of time.
The Enterprise Act 2016 (the Act), which received Royal Assent on 04 May 2016, comes into force today: 04 May 2017.
Prior to the Act coming into force, there was no legal obligation, in England and Wales, for insurers to pay valid insurance claims within a reasonable period of time.
The Act, through the addition of a new section in the Insurance Act, will insert an implied term into every contract of insurance (entered into on or after 04 May 2017) providing that if the policy holder makes a claim under the contract, the insurer must pay any sums due in respect of the claim within a “reasonable time”. If the insurer breaches this obligation, policy holders will be able to claim damages (for the first time) according to the normal principles of contract law.
What is a “reasonable” period of time? Is there a time limit for bringing late payment claims? Can insurers contract out of this new implied term? Read our full article here which summarises this new legal rule, and the practical implications for the insurance market.
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