Section 13A of the Insurance Act 2015 makes late payment a breach of contract. What it gives your client, what it does not, and the chase record brokers need.
Every brokerage has one: the claim that will not close. The adjuster has been out, the schedule of loss went in months ago, and the client now rings you rather than the insurer to ask where the money is. Cash flow is tightening, somebody in their boardroom has started asking what exactly the broker is for, and your honest answer is that you are chasing. What fewer brokers use is the statutory answer to the question the client is really asking: is the insurer allowed to take this long?
Section 13A of the Insurance Act 2015 was inserted by the Enterprise Act 2016 and came into force on 4 May 2017, applying to contracts entered into after that date — by now, effectively every live policy on your book. It implies a term into every insurance contract, consumer and commercial alike: if the insured makes a claim, the insurer must pay any sums due within a reasonable time. Before it, an insured whose business was damaged by a slow payout was generally left with interest and nothing more, because English law treated the payout itself as damages and refused to award damages for paying damages late.
Four points from the text matter in practice. Subsection (2) confirms that a reasonable time includes a reasonable time to investigate and assess the claim — the clock is not a service-level agreement. Subsection (3) lists the circumstances a court weighs: the type of insurance, the size and complexity of the claim, compliance with any relevant statutory or regulatory rules or guidance, and factors outside the insurer's control. Subsection (4) gives the insurer its defence: if it had reasonable grounds for disputing the claim, including the amount payable, it does not breach the term merely by withholding payment while the dispute continues — although how it conducted itself remains relevant to whether and when a breach occurred. Subsection (5) confirms that damages sit alongside, not instead of, the right to enforce payment and to interest.
One deadline is easy to miss. Under section 5A of the Limitation Act 1980, a claim for breach of the implied term must be brought within one year of the date the insurer has paid all the sums due under the claim — not the usual six years. A client who settles in March and consults solicitors about their consequential losses two years later has lost the point entirely.
The first reported decision on section 13A, Quadra Commodities SA v XL Insurance Company SE in the Commercial Court in 2022, is a useful corrective to client expectations. The judge accepted that a reasonable time in that case was not more than about a year from notice of loss, but also found that the insurers had reasonable — though ultimately mistaken — grounds for disputing the claim, and that the delays in their investigation still fell within a reasonable time. The section 13A claim failed.
The lesson for a broker is to be careful what you promise. Section 13A is not a fast-track payment rule and it does not turn every frustrating claim into a damages claim. It bites on unreasonable conduct, not on slowness by itself, and the more complex the loss — fraud allegations, coverage disputes, forensic accounting, a subscription market with a lead and followers — the more time an insurer can reasonably take. What it does give you is leverage and a vocabulary, and both work far better when your file shows exactly who was waiting for what, and since when.
| Section 13A(3) factor | What it looks like in your claim file |
|---|---|
| Type of insurance | A motor total loss and a business interruption claim on a contested indemnity period are not judged on the same timescale |
| Size and complexity | The schedule of loss, the adjuster's information requests, the number of markets on the slip |
| Compliance with regulatory rules or guidance | Whether the insurer met its ICOBS 8 duties on progress updates and prompt settlement |
| Factors outside the insurer's control | Documents the client never supplied, a third-party report, a police investigation |
| Reasonable grounds for dispute | A coverage point genuinely raised and pursued, versus silence and repeated re-reviews |
Section 16A of the same Act controls contracting out. In a consumer contract, any term that puts the consumer in a worse position on the matters provided for in section 13A is to that extent of no effect. In a non-consumer contract, an insurer may contract out — but only if the transparency requirements in section 17 are met, meaning the term is clear and unambiguous and was drawn to the insured's attention before the contract was concluded. Even then, no commercial wording can exclude liability for a deliberate or reckless breach, defined as the insurer knowing it was in breach or not caring whether it was.
That makes section 13A a placement issue as much as a claims issue. When you review a commercial wording, look for the clause that limits or excludes the late-payment term — and if it is there, record that you saw it, that you explained it, and what the client decided. A broker who never noticed the exclusion and then encourages a client to threaten a section 13A claim two years later has created their own professional indemnity problem.
Section 13A is a contractual remedy between insured and insurer, enforced in court. Alongside it sits the FCA rulebook. ICOBS 8.1 requires an insurer to handle claims promptly and fairly, to give reasonable guidance to help a policyholder make a claim and appropriate information on its progress, not to unreasonably reject a claim, and to settle promptly once terms are agreed. Where your firm has no authority to deal with a claim, the same chapter expects you to forward a notification promptly or tell the policyholder immediately that you cannot deal with it — a rule that quietly punishes brokerages where a claim notification sits unread in a personal phone over a long weekend.
For eligible complainants, the Financial Ombudsman Service is usually the faster and cheaper route to a remedy, and complaint handling has its own timetable once a client expresses dissatisfaction; our guide on when a WhatsApp message becomes a complaint sets out where that line sits. Under the Consumer Duty, a retail client left without information about their own claim for weeks is a foreseeable-harm conversation waiting to happen at your next board review.
Whatever route the client eventually takes, it will be won or lost on dates. A brokerage that can produce a clean timeline is a brokerage that gets claims paid faster, because it can escalate with specifics instead of adjectives.
This is ordinary claims advocacy done with discipline, and it is where a shared WhatsApp inbox earns its keep: the conversation belongs to the brokerage rather than to a handset, every update is attributable to a named adviser, and the thread can be exported when someone finally asks for the chronology. Our claim follow-up use case sets out the cadence step by step, and the claim status update template gives you wording that says something even when there is no news. More on the wider discipline in our guide to claims advocacy for commercial clients.
Damages, and they are additional. Subsection (5) confirms that the remedies for breach of the implied term are without prejudice to the right to enforce payment of the sums due and to any right to interest, whether under the contract, another enactment or the court's discretion. In practice the losses a commercial client wants to recover — finance costs, lost contracts, a business that could not restart — are exactly the ones that used to be irrecoverable.
One year from the date the insurer has paid all the sums due in respect of the claim, under section 5A of the Limitation Act 1980. That is much shorter than the six years most clients assume for a contract claim, and it is worth flagging at the point the claim settles rather than months afterwards.
It can, within limits. Section 16A allows contracting out in non-consumer contracts if the transparency requirements of section 17 are satisfied, but never in relation to a deliberate or reckless breach. In consumer contracts, a term that worsens the consumer's position on section 13A has no effect. Check the wording at placement and record what you told the client.
The implied term binds the insurer, because it is a term of the insurance contract. The conduct rules, however, follow the firm doing the work: an intermediary handling claims under delegated authority is expected to handle them promptly and fairly, provide progress information and settle promptly once terms are agreed. In that situation the delay being complained about may well be yours.
You are not there to give legal advice, and saying "you have a section 13A claim" is exactly that. What you can do is keep an accurate chronology, explain that the law requires payment within a reasonable time, point out the one-year limit once the claim settles, and suggest the client takes their own advice if they believe the delay caused them loss. Record that you did so.
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