From today, insurers in the UK will be required to pay valid insurance claims within a reasonable time and may be hit with damages claims from insureds, if they fail to do so.

This change has been brought about by the Enterprise Act 2016, which inserts a new section 13A into the Insurance Act 2015 (the “Act”).  The effect of this change is that it will be an implied term of every contract of insurance (both consumer and business) that the insurer shall pay valid claims within a “reasonable time”.  Breach of this term will entitle an insured to damages for late payment, in addition to the proceeds of the claim itself plus interest.