The Act inserts provisions into the Insurance Act 2015 which
will apply to contracts entered into on or after
4th May 2017.
The new section 13A of the Insurance Act will add an implied
term to every insurance contract requiring a (re)insurer to pay any
sums due in respect of a claim made by the (re)insured "within
a reasonable time" (which will include a "reasonable
time" to investigate and assess the claim).
There will be a remedy for breach of the implied term where late
payment of a valid claim has resulted in the (re)insured suffering
consequential loss. The remedies available are said to include
damages (in addition to having the claim paid and interest). Such
damages are not punitive in nature, in contrast with US "bad
faith" damages. Instead they are assessed by reference to the
amount of loss the insurer could reasonably have foreseen (at the
time the policy was bound) that the insured would incur if a claim
was paid unreasonably late.
