European buyers set for late claims payment damages in UK following market-wide agreement

The amendments to clauses 20 and 21 of the bill would put a one-year time limit on claims for damages from policyholders and insurers would not be obliged to disclose privileged legal advice received in the defence of the claim. Crucially though the original damages for late payment policy objectives contained in the Enterprise Bill will be preserved. On the basis of these proposals, the London market will not encourage the tabling of further amendments to the bill and it is expected to pass into law in 2016. The amendments were tabled and debated at length in the House of Lords on Wednesday. The UK Government has agreed to consider the market-wide proposed amendment to the Enterprise Bill on limitation but rejected the amendment on privilege. The London market is still considering its position on this second amendment. It still has the opportunity to make its case and have the amendment considered in further readings of the bill.hideInsurance representative bodies in London-the Lloyd's Market Association (LMA), the International Underwriting Association (IUA) and Lloyd's-had expressed deep reservations about the damage for late claim payment proposal in the Enterprise Bill and wanted to heavily water down the law change. They raised a raft of concerns about the controversial clause that obliges insurers to pay compensation to commercial policyholders if valid claims are not paid within a reasonable timeframe. The measure is strongly supported by Airmic, which has been campaigning to provide greater security and guaranteed cash flow for companies in the event of a major claim. The move is designed to enhance customer experience while simultaneously increasing the attractiveness of the UK's insurance sector. The bill had already won the support of three other UK organisations representing insurance underwriters and intermediaries-the Association of British Insurers, the London International Insurance Brokers' Association and the British Insurance Brokers' Association. When the London market insurance bodies initially objected to the proposals battle lines were drawn but now insurers and Airmic have thrashed out an agreement that is suitable to both sides of the risk transfer divide following crucial work carried out by insurance governance expert firm Mactavish. Airmic, the LMA, IUA, Lloyd's and Mactavish wrote to the UK Business Minister Baroness Neville-Rolfe expressing support for the Enterprise Bill, subject to certain recommended amendments. The letter recommends the two changes to the legislation that addressed legitimate concerns raised by the London market. The proposed amendments to the bill were drafted by Colin Edelman QC and Richard Harrison of Devereux Chambers-two of the most influential and respected insurance law experts in the UK-following instruction from Mactavish. The two lawyers had been instructed by Mactavish to consider the merits of all the objections to the Enterprise Bill raised by the London market bodies. They found that a number of the points raised by the London market didn't warrant legislation and the matters could instead be handled by the courts. The objections were dropped by the insurance bodies in a meeting with Mactavish and Airmic. Airmic CEO John Hurrell told CRE that in his association’s view the amendments did not 'prejudice the value of the new rights available for policyholders being proposed in the bill'. He said that Airmic understands that the legislation now has a very good chance of progressing rapidly into law. "This will be a terrific result for the industry and I'd like to recognise the significant role played by Mactavish in reaching this agreement. I'd also congratulate Lloyd's and the London market for their responsiveness in addressing the needs of their policyholders," he said. According to Mactavish CEO Bruce Hepburn: "This [agreement] is a great overall result for the London insurance market, its customers and the UK insurance industry as a whole. The legislation is intended to protect otherwise healthy businesses that might depend on receiving prompt payment of an insurance claim." It will also benefit insurers in the UK by making them more attractive to their potential customers around the world, he said. He said the Enterprise Bill as now proposed by the London market, will further stimulate professionalism within the London market. According to Mactavish's special adviser and former UK Law Commissioner David Hertzell: "Taken together with the passing of the Insurance Act earlier this year, it represents a step change in the way the industry treats and relates to its customers."

European buyers set for late claims payment damages in UK following market-wide agreement

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