Damages for Late Payment of Claims in EnglandAIDA Reinsurance Working Party, Paris - 2 December 2015Simon Cooper, Partner

Background

The Insurance Act 2015

The legal fiction of Insurance

The Enterprise Bill 2015

Enterprise Bill

Implied term in all ‘insurance contracts’ that claims must be paid ‘within a reasonable time’

Remedy for breach will be the usual remedies for breach of contract, including damages

The right to claim interest for late payment will remain

These new provisions will apply to all contracts entered into after this Part of the Bill comes into force

A Reasonable Time?

Includes time to investigate and assess claim

Depends on all the circumstances including:

› Type of insurance

› Size and complexity of the claim

› Compliance with regulatory rules and guidelines

› Factors outside the insurer’s control

Disputing a Claim

If insurer shows that there were reasonable grounds for disputing claim (either as to cover or amount):

› Failure to pay while dispute is continuing will not be unreasonable; but

› Conduct of insurer in handling claim may be a relevant factor in deciding if there has been a breach

Contracting Out

No contracting out of the implied term in consumer contracts

No contracting out of implied term in respect of ‘deliberate or reckless’ breaches in commercial contracts

Contracting out otherwise permitted in commercial contracts subject to ‘transparency provisions’ of Insurance Act 2015

Potential Amendments

Limitation issues

Privilege issues

Some Potential Claims Issues

Claims Control Clauses

Subscription markets

Layering

Reinsurance Issues

Coverage in respect of damages awarded against reinsured for late payment?

Principles and legislation

Contractual coverage

Application to Reinsurance Claims

Scope of Insurance Act 2015

The meaning of ‘Insurance Contract’

Loss and Damages

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simon.cooper@incelaw.com