Enterprise Bill – Government adopts one year limitation period for late payment of claims

The Bill is back in the Lords next week for its report stage debate on 15 December. As we know, the Government is introducing the new obligation to pay insurance claims “within a reasonable time” via this Bill. This is, of course, a subjective test that will depend on the type of insurance, the complexity of the claim and on other factors. An insured will have a right to sue its insurer if this obligation is breached.

A late amendment tabled by the Government on 8 December now provides for a one year limitation period for this new action. The year runs from the expiry of the “reasonable time” in which the claim should have been paid. This limitation period is quite distinct to that which applies to the right to sue for the proceeds of the claim itself.

Attempts had been made, during the Bill’s earlier stages, to provide on the face of the Bill that legal privilege would necessarily attach to advice obtained by the insurer on the merits of the claim. It may well do, but the Government refused to set that out in the Bill. That said, Ministers have  now adopted a clear test on limitation, which was another aim of those proposing the clarification around privilege.


About the Author

akAlistair Kinley is BLM’s Director of Policy & Government Affairs.

Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.

He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).

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