Late payment and potentially fraudulent claims

2017 is now upon us, meaning that implementation of the “late payment” amendment to the Insurance Act 2015 on 4 May is fast approaching. This amendment, set out at part 5 of the Enterprise Act 2016 introduces an implied term into all insurance contracts (and variations) entered into after this date that claims will be paid “within a reasonable time”.

While it is the aim of all insurers to pay claims in a timely manner, sometimes, particularly with claims where concerns arise over potential fraud, payment may be delayed while the claim is validated, potentially giving rise to a claim by an insured for late payment.

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Autonomous driving: Government response

There is huge public interest in the issue of driverless cars with Rory Ceglan-Jones reporting from the driving seat of a BMW at the CES Tech Show in Los Angeles on BBC News last week. The huge investment of not only the traditional manufacturers but also the “tech” companies demands a regulatory response at several levels and the UK Government (with DfT leading) has been at the forefront of recognising the need to change, the opportunities of a safer motor environment and the economic opportunities that arise from encouraging the adoption of the technology.

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Fair Presentation: Insurance Act theory and practice

Inevitably it is far too soon for any cases considering the “Statute of the Year” but that does not mean that nothing has been happening in the real world. We are a mere four months post-commencement of the Insurance Act and not surprisingly, a good deal of negotiation has taken place around the terms of fair presentation and the extent of the search.

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Late Payment: Yes but no but…

“Next year” is nearly upon us and in 2017 the “late payment” amendment to the Insurance Act 2015 introduced by the Enterprise Act 2016 will apply to policies entered in to (or variations) from 4 May. Time will pass incredibly quickly yet there are steps that should be considered now in relation to policy wording if the underwriter wishes to contract out of the new implied term.

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Insurance Act 2015; a little less arbitration

Four months have passed since the Insurance Act became law in August.  Too early for any major court decisions but, nonetheless, time enough for a few preliminary observations.  Despite some initial doubts and wobbles, the market has largely taken the new law in its stride.  Policies have been updated, training sessions have been provided and processes have been refreshed.  Some have focused on gaining market advantage, whilst others have taken a more technical approach. As with all change some have adapted better than others.  In some cases risk managers have been surprised at what their reasonable search revealed and underwriters by what their old policies contained.  Generally however, more thought seems to have been given to the placement process and in addition, the better prepared brokers have examined their role, procedures and what liabilities they can assume.

The Insurance Act is principles based but the facts behind any disputes will be infinitely variable.  Was the presentation fair, was the search for information reasonable, were individuals “senior management”, was the warranty a risk migration term or did it define the risk?  All of these questions could give rise to new test litigation.  If the Insurance Act follows CIDRA then the nature of disputes may alter too, moving away from misrepresentation and non-disclosure towards post-loss conditions, the extent of cover and the effect of policy terms.

We should expect some significant litigation over the next few years which will give further guidance to the market.  However, many policies contain binding arbitration clauses which, as several senior judges have observed, hinder the development of the common law.  The process may therefore take longer than would be ideal.  Whatever the courts eventually decide whether the Law Commissions will have achieved their aims of improving practices to support the UK insurance industry abroad and assist its reputation at home may not be known for some time yet.

Written by David Hertzell, consultant

Brexit means … buzzword bingo?


Minister of State, David Jones managed to cram in at least seven Brexit buzz phrases, highlighted in bold below, in a written reply on 1 December to a recent Parliamentary question about whether the Government would ensure that transitional arrangements are in place before the UK leaves the European Union.

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Brexit: the grand repeal of EU law?


Wakefield MP Mary Creagh tabled broadly the same question to all major Government Departments last week, asking what proportion of existing EU legislation within each Department’s remit could not immediately be brought into UK law when the UK leaves the EU?

Unsurprisingly, she got very similar answers from the various Departments. This from the Ministry of Defence yesterday (30 November) is typical:

The Government will bring forward legislation in the next session that, when enacted, will repeal the European Communities Act 1972 and ensure a functioning statute book on the day we leave the European Union. This ‘Great Repeal Bill’ will end the authority of EU law and return power to the United Kingdom. The Bill will convert existing EU law into domestic law, wherever practical and in that context all relevant legislation is currently being identified and assessed.

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Late payment, supplier responsibilities and contractual terms

Insurance law reform has been a long process with Law Commission consultations starting in the mid “noughties”, through CIDRA in 2012, the Insurance Act in early 2015 and the long haul of implementation to commencement already now more than 100 days ago.  So it is all too easy to relax, having passed the finishing line but equally important to remember that full implementation will take place when the “late payment” clause comes in to effect next year.

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