On 4 May 2016, the Enterprise Act 2016 was granted Royal Assent. The amendments that the Enterprise Act 2016 makes to the Insurance Act 2015 and the Limitation Act 1980 will come into force on 4 May 2017.
As described in detail in our earlier updates (links to which are shown below[1]) the Enterprise Act 2016 implies a term into all contracts of insurance that insurers must pay any sums due to their insured within a “reasonable time”. This is an important change in the law in England and all insurers must be alive to the risks of failing to pay proper claims promptly. As described in our first update, insurers can contract out of these provisions in non-consumer contracts, but in order to do so they must follow the strict transparency requirements in s17 of the Insurance Act 2015[2]. Insurers must note that they will not be able to contract out of these provisions in consumer contracts.
[1] 2 October 2015 update, 4 February 2016 update and 25 April update [2] Insurance Act 2015 section 17 requires an insurer to take “sufficient steps” to draw any disadvantageous term of a non-consumer insurance contract to the insured’s attention before the contract is entered into or any disadvantageous is variation agreed. What is, in practice, meant by “sufficient steps” will vary depending on the characteristics of the insured and the circumstances of each individual insurance transaction, so must be assessed on a case-by-case basis.For our April 2015 and October 2015 Updates to the Enterprise Act, please see the following links October 2015 Enterprise Act update, April 2016 Enterprise Act Update and February 2016 Enterprise Act Update.
