The Insurance Act 2015, implemented most of the Law Commission's recommendations concerning insurance contract law; however those relating to late payment were introduced into Parliament via the Enterprise Bill on 16 September 2015, in respect of which the final day of the committee stage took place on 4 November 2015.
The Enterprise Bill has been designed to make provision relating to the promotion of enterprise and economic growth, and is set to cut red tape for business by at least £10 billion over the next 5 years and to back business to create jobs.
One the reforms addressed in the Enterprise Bill is to oblige insurers to make prompt payment in respect of monies owed under policies or face a claim for damages. As the law currently stands, insurers are under no obligation to pay valid claims within a reasonable time. If they pay unreasonably late or fail to pay at all, policyholders can sue for the money they are owed under the policy, plus interest, but they cannot claim compensation for any additional loss they have suffered due to the delay.
The aim of the reforms as recommended by the Law Commission is to: (1) oblige insurers to pay valid claims within a reasonable time, unless they have reasonable grounds for disputing the claim; and (2) allow policyholders to claim damages for any additional loss they suffer because of the insurer’s late or non-payment.
The reforms aim to bring insurance law into line with general contract law principles.