The Enterprise Act is an extensive piece of legislation designed to benefit the UK’s 5.4 million businesses, and became law on 4th May 2016, coming into effect May 2017. With a one-year transition period both businesses and the insurance industry will be able to make any necessary changes required by the new Act. The measures have been welcome news to both groups, including the British Insurance Brokers’ Association (BIBA) who commented that it ‘means good news for the insurance sector and for business’ as it marks a move toward a more deregulated environment that should make it easier to start and grow businesses in the United Kingdom.’
The Act introduces a number of measures, aimed at cutting ‘red tape’, tackling late payments and adding support for apprenticeships.
What are the implications for businesses?
One major change introduced by the Act is an addition to the Insurance Act 2015 which allows businesses to sue for damages if they suffer financial loss due to late insurance claim payments. According to BIBA’s Executive Director Graeme Trudgill, BIBA lobbied for this as it benefits brokers’ commercial clients and helps guarantee that insurers are providing expedient payments to help businesses return to operations as quickly as possible after an interruption.
A recommendation by experts is that insurers and brokers spend the next year scrutinising their claims procedures and establishing more streamlined systems to ensure that claim payments are handled promptly. Failure to do so could invite legal action.
The move toward deregulation has also been celebrated by the insurance industry, which should include the Financial Conduct Authority (FCA), the body that regulates insurers. Under the Act, the FCA, like other regulators, may be required to report annually on the impact its actions have on business.