In our 1 October 2015 bulletin1 we reported on the launch of the UK Enterprise Bill (the Bill), which contains proposals to amend the Insurance Act 2015 to create a new liability regime for late payment of claims. The Bill had its second reading in the House of Lords on 12 October 2015.
Lord Patten described the Bill as “a big legal pudding made up of all sorts of ingredients hauled off the shelf” but spoke in support of the claims payment provisions, exhorting the insurance industry to start observing the new principles before the Bill becomes law. However the Conservative peer Lord Flight highlighted concern in the Lloyd’s and wholesale insurance markets and the lack of consultation with the LMA or IUA. He observed that the Bill’s Impact Assessment was flawed, with “unrealistic underestimates of the damage for late-payment provisions, with continuing costs of investigating unmeritorious claims of just £375,000 per annum for the entire industry and increased litigation costs of £100,000 for five years for the entire industry. These sums could be absorbed by just one major speculative claim.”
He then called for the Government to come forward with their own amendments to disapply the provisions in respect of large insurance risks, where statutory protection was not appropriate or necessary for international business and commercial risks written in London.
The Labour peer Lord Stevenson indicated that he broadly supported the proposals but that there was still “a long way to go” to refine them and said that he looked forward to picking them up again in committee. The committee stage, a line-by-line examination of the Bill, will begin on 26 October 2015. The full transcript of the 12 October 2015 debate is available in Hansard2.