Michelmores Michelmores
Michelmores Michelmores
  • Home
  • Expertise
  • People
  • Insights & Events
  • Careers
  • About
  • ESG
  • Contact
Share
Published September 23rd 2021
Home > News & Insights > Article

Fresh hope for policyholders! Government's Enterprise Bill picks up on late payment of insurance claims

Fresh hope for policyholders! Government's Enterprise Bill picks up on late payment of insurance claims
 

We previously reported that the new Insurance Act 2015, which is due to come into force on 12 August 2016, would not include the Law Commissions’ proposed amendments to the law regarding late payment of insurance claims.

The current law prohibits policyholders from recovering losses suffered as a result of an insurer’s unreasonable delay in paying a valid insurance claim, and consequently fails to encourage insurers to deal with claims expeditiously. In our experience, this can often lead to a situation where insurers delay responding to a claim in order to put pressure on the policyholder to accept a lower settlement.

On 17 September, the Department for Business, Innovation & Skills (BIS) released a series of publications relating to the Government’s Enterprise Bill, including an announcement that the Bill would seek to tackle the problem of late payment of insurance claims. BIS said:

“Late payment is a major problem for businesses. Where a business has suffered a loss such a fire or flood, it is likely to rely heavily on insurance. Any unnecessary delay in payment can have significant impacts on a business’ ability to continue or re-start trading after an insured loss. However, insurers under contracts of indemnity insurance in England and Wales are under no legal obligation to pay valid claims within a reasonable time. Although Financial Conduct Authority (FCA) rules require claims to be handled and settled promptly, any failure to comply does not entitle a policyholder to claim damages for late payment. The Government is committed to combating unreasonably late payment of sums due to businesses in particular. The law should incentivise insurers to pay as promptly as is reasonable, and give policyholders a legal right to enforce this.”

The Bill proposes to:

  • Introduce into every contract of insurance a requirement on the insurer to pay sums due within a reasonable time;
  • Provide a non-exhaustive list of matters which may be taken into account when determining what is a reasonable time for payment in the particular circumstances of a case; and
  • Allow for contracting out of the default rules for non-consumer contracts, provided that the insurer satisfies the transparency requirements set out in the Insurance Act 2015.

Michelmores has previously called for the law on late payment of damages to be changed to protect policyholders and bring English law in line with the position in most other major jurisdictions. Harriet Stokes presented a paper in support of reform at the June 2015 AIDA Conference in Copenhagen and her work on the subject has been published in the British Insurance Law Association Journal.

Share

Contact us

+44 (0) 333 004 3456

enquiries@michelmores.com

Subscribe to updates

  • Quick Links
    • Online Payments
    • People
    • About
    • Careers
    • Staff Login
  • Legal & Regulatory
    • View all policies
    • Privacy Policy
    • Website Terms
    • Cookie Policy
    • Modern Slavery Act

Locations:

  • london
  • cheltenham
  • bristol
  • exeter

© Michelmores LLP is a Limited Liability Partnership, authorised and regulated by the Solicitors Regulation Authority (SRA authorisation number 463401) and registered in England and Wales under Partnership No. OC326242.
The registered office is Woodwater House, Pynes Hill, Exeter, EX2 5WR. A list of the members (all of whom are solicitors or barristers) is available for inspection at the registered office and at michelmores.com

  • © 2025 Michelmores LLP. All rights reserved
  • Website maintained by Appeal Digital