The Enterprise Act 2016
From the 4th May 2017, The Enterprise Act 2016 becomes law.
Alongside a package of other measures designed to benefit business owners, the Enterprise Act makes provision in relation to damages for late payment of claims settlements – creating a legal obligation for insurers to pay claims to businesses within ‘a reasonable time’.
What does it entail and exclude?
The act provides that it will now be an implied term of every insurance contract (placed or renewed on or after 04/05/2017) that an insurer must pay any sums due in respect of a claim made by the insured ‘within a reasonable time’. The reasonable time includes a period to investigate and assess the claim.
What will constitute a reasonable time will depend on the claim taking into account relevant circumstances. The Act provides examples of such considerations as:
• The type of insurance
• The size and complexity of the claim
• Compliance with statutory or regulatory rules or guidance
• Factors outside the insurer’s control
If an insurer can show that there are reasonable grounds for disputing the claim, they will also not be in breach of the new law.
What does it mean for your business?
An amendment to the Insurance Act 2015, these rules gives policyholders a potential right to claim damages in the event of a late settlement payment.
This may act as an incentive for insurers to process and pay claims promptly, as well as providing an often much-needed cash injection for businesses who are owed insurance payouts. To claim, the insured party must prove that they had a valid claim under the policy, the insurer failed to pay within a reasonable time, and that they suffered a foreseeable loss by virtue of not having received a prompt settlement.
Claims against insurers for breaching these new rules must be brought no later than one year from the date on which the insurer has paid all the sums due in respect of the claim.
For more information on The Enterprise Act 2016 and how it may affect your business, simply get in touch with the Rollinson Smith Insurance Brokers team on 01952 607600.