The Enterprise Act 2016 received royal assent on 4 May 2016. The key provisions from an insurance perspective are as follows:

  • Part 4A of the Act introduces an implied term into every contract of insurance obliging insurers to pay insurance claims within a reasonable time.
  • The concept of ‘a reasonable time’ is not expressly defined, but factors such as the type of insurance, size and complexity of the claim and compliance with regulatory guidance will be relevant in the circumstances.
  • If an insured party has suffered loss as a result of the insurer’s breach of the implied term, the insured can claim damages in respect of this over and above the sums due under the contract. 
  • The insurer will have a potential defence if it has reasonable grounds for failing to pay.
  • Parties to a non-consumer insurance contract can choose to contract out of the requirement to pay claims in a reasonable time period. 

A link to the Eversheds briefing note on the Enterprise Act 2016 may be found here.