Today saw the enactment of the Enterprise Bill 2015 which at the stroke of the Royal pen transforms itself to the Law of the land as the Enterprise Act 2016. The significance for the insurance industry arises from sections 28 to 30 which introduce in to the Insurance Act 2015 the “late payment” clauses that were felt to be inappropriate for the Law Commissions’ special procedure for non-controversial legislation in late 2014. The Government was however persuaded of the merit of the original recommendations and included the provisions in the Enterprise Bill now enacted.
We have commented on the new clauses, which imply a term in to every insurance contract that a claim will be paid ‘within a reasonable time’, in the supplement to our Time for Change document launched at an ABI event in January. There were no changes to the Bill made by the House of Commons and whilst we will be amending the supplement the only substantive change is to insert a commencement date. The new provisions apply not just to commercial policies but to all insurance contracts, that are incepted or renewed from 4 May 2017.
Enactment marks a further date in what will prove to be a busy time for insurance laws which, rather like London buses have come along all at once although the waiting time of 100 year is unusual even for a Routemaster. The Insurance Act 2015 provisions (excluding ‘late payment’) will apply to policies from 12 August this year; there is a consultation by the Law Commissions on Insurable Interest concluding on 20 May; the Third Party (Rights against Insurers) Act 2010 will eventually come in to force between July and October this year and finally of course the ‘late payment’ provisions to policies from 4 May next year.
Brokers, policyholders, underwriters and claims teams will need to keep a close eye on the detail of new policies, commencement dates and processes as these changes affect more than a century of existing law and commercial practices.
Written by Terry Renouf, partner, BLM