Policyholders Gain Right to Damages for Late Payment

On May 4, 2016 the Enterprise Act received the Royal Assent and became law in the UK. Once its relevant provisions come into force on May 4, 2017, it will introduce for the first time into English law a right for policyholders to recover damages for late payment of insurance claims from insurers (Scottish law already recognizes an implied obligation for an insurer to assess a claim reasonably quickly and with diligence).

The new right had been scheduled by the Law Commission for inclusion in the draft legislation that became the Insurance Act 2015. The provisions originally drafted by the Law Commission were amended as a result of pro-insurer pressure during the passage of the Enterprise Bill to add a one-year time limit for policyholders to bring claims.