Enactments get refined
with passage of time. A Govt. Press
release states that the UK’s 5.4 million
businesses are set to benefit as the Enterprise Bill received Royal Assent (4 May 2016) to become the Enterprise Act.The package of measures in
the Act are aimed at helping the government deliver on many of its
commitments, from cutting red tape and tackling late payment to boosting the
quality and quantity of apprenticeships.
The Enterprise Bill 2015
received Royal Assent on 4 May 2016. The provisions relevant to insurers are
those at sections 28 -30, which come into force from 4 May 2017 and amend
various sections of the Insurance Act 2015 (the rest of which generally came
into force on 12 August 2016).
Enterprise Act 2016 :An
Act to make provision relating to the promotion of enterprise and economic
growth; provision about Sunday working; and provision restricting exit payments
in relation to public sector employment.BE IT ENACTED by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual
and Temporal, and Commons, in this present Parliament assembled, and by the
authority of the same .. .. ..
Under a new section 13A of
the Insurance Act 2015, it will be an implied term of every contract of
insurance that the insurer must pay any sums due in respect of a valid claim
within a reasonable time, and will liable to the insured in damages in the
event of breach.This key provision will end the position under Sprung v Royal
Insurance [1997], which held that an insurer could not be liable in damages,
even for deliberate late payment of claims and an insured’s redress for late
payment was limited to the additional payment of interest. The change brings
English insurance law closer into line with the position in many other major
jurisdictions and will be welcomed by insured companies.
Bharat Insurance
Building, Chennai
Part 5 of the Act deals with late payment of insurance
claims
·
Insurance contracts: implied term about
payment of claims
·
Contracting out of the implied term about payment
of claims
Before that the Act deals with a range of Government commitments
which are intended to support the growth of enterprise in the United Kingdom.
Some features of the Act :
• establishes a Small Business Commissioner,
to enable small businesses to resolve disputes with larger businesses and avoid
future issues; • expands the deregulation target to include regulators;[
The Act specifies what Small business as
meaning a relevant undertaking which—
The Small Business Commissioner 2 (a) has a headcount of staff of less than 50,
(b) if the business threshold condition applies to the relevant undertaking,
meets that condition, and (c) is not a public authority.] •
requires regulators subject to the duty to have regard to the Regulators' Code
and/or the Growth Duty to report on the effect these duties have had on the way
they exercise the functions to which these duties apply; • extends the Primary
Authority scheme to make it easier for more businesses to join; • protects the
term apprenticeship in law, with a view to ensuring that apprentices have
access to high quality training; • gives powers to set targets for apprentice
numbers in the public sector; • requires insurers
to pay insurance claims within a reasonable time; • reforms the business
rates appeals system and reduces the burdens for businesses when dealing with
local authorities in relation to business rates; • extends the rights of shop
workers working on Sundays; .. .. ..
What does the inclusion of
new S.13A in the Act mean for Insurers :
• It will be an implied term in all “insurance contracts” that
claims must be paid “within a reasonable time”. “Insurance contracts” in this
context will include reinsurance contracts.
• The remedies for breach of this implied term will be the
usual remedies for breach of contract, including damages. That means, of
course, that the usual tests of causation will have to be satisfied and the
insured will have to prove on the balance of probabilities that any loss for
which it claims damages was caused by the insurer’s breach of the implied term.
• The right to claim interest for late payment will remain and
any damages will be in addition to that interest and in addition to the amount
payable under the insurance in respect of the original claim.
• The limitation period in which an insured can bring a claim
for damages for late payment will be one year from the date of the last payment
by the insurer in respect of the relevant loss.
It is an implied term of
every contract of insurance that if the insured makes a claim under the
contract, the insurer must pay any sums due in respect of the claim within a
reasonable time. The new provisions
specify that –
(2)A reasonable time
includes a reasonable time to investigate and assess the claim.
(3)What is reasonable will
depend on all the relevant circumstances, but the following are examples of
things which may need to be taken into account—
(a)the type of insurance,
(b)the size and complexity
of the claim,
(c)compliance with any
relevant statutory or regulatory rules or guidance,
(d)factors outside the
insurer’s control.
(4)If the insurer shows
that there were reasonable grounds for disputing the claim (whether as to the
amount of any sum payable, or as to whether anything at all is payable)—
(a)the insurer does not
breach the term implied by subsection (1) merely by failing to pay the claim
(or the affected part of it) while the dispute is continuing, but
(b)the conduct of the
insurer in handling the claim may be a relevant factor in deciding whether that
term was breached and, if so, when.
(5)Remedies (for example,
damages) available for breach of the term implied by subsection (1) are in
addition to and distinct from—
(a)any right to enforce
payment of the sums due, and
(b)any right to interest
on those sums (whether under the contract, under another enactment, at the
court’s discretion or otherwise).”
Interesting !
With regards – S.
Sampathkumar
5.5.2017
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