Damages for Late Payment of Claims in England AIDA Reinsurance Working Party, Paris - 2 December 2015 Simon 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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