The third reading of the Enterprise Bill 2015 took place in the House of Lords yesterday, 15 December 2015. If the Enterprise Bill receives Royal Assent, new legislation which penalises insurers for late payment of claims will be inserted into the Insurance Act 2015 at clause 13A.
Following previous lively debate over the proposal to limit the period for policyholders bringing an action against insurers for late payment of claims, the House once again considered the ‘Late Payment of Claims’ clause.
Without amendment, the Bill as it stands would allow policyholders up to six years from settlement to bring an action for late payment of claims.
Following input from a range of insurance market bodies, it was proposed that a one-year time limit should apply for policyholders to bring actions for late payments of claims. This would mean insurers would not need to keep their books open and hold reserves for possible late payment litigation for a lengthy period of time, which in turn would arguably increase premiums. Instead insurers would have certainty after a year.
The Government was of the opinion that the proposed one-year time limit produces a better balance of policyholder and insurer interests.
Accordingly, the amendment was agreed by the House, which is a positive development for insurers and, indirectly, may benefit policyholders in terms of premium levels. The Enterprise Bill 2015 in its revised form will now go to the House of Commons for its first reading.