How often have we seen insurers raise spurious defences, ask further questions and delay payment of good claims for years? For obvious reasons, the insured’s priority when making a claim under any type of insurance policy is that the claim is successfully and promptly resolved. However, it was not until 2016 that any statutory guidance was developed in England on the subject of what is a reasonable time to investigate, evaluate and settle a claim.
Introduced by the Enterprise Act 2016 which came into force on 4 May 2017, Section 13A of the Insurance Act 2015 implies a term into every contract of insurance (concluded after 4 May 2017) that “the insurer must pay any sums due in respect of the claim within a reasonable time”, which is allowed to include “a reasonable time to investigate and assess the claim”.
Section 13A requires insurers to justify the time they take to reach a determination on claims. However, prior to this year, the meaning of “reasonable time” remained undefined in either the legislation or case law.