Case law summary · Reviewed by Chrissie Anderson, Client Executive · Last reviewed
One of the earliest reported Commercial Court decisions to engage with section 13A of the Insurance Act 2015 — the implied term that insurers must pay sums due in respect of a claim within a reasonable time.
The dispute arose from the casualty of the MV Solomon Trader, a bulk carrier which grounded on Rennell Island in the Solomon Islands in February 2019 while loading bauxite. The grounding caused a significant heavy fuel oil spill and substantial pollution liability and wreck-removal exposure.
The vessel’s owners and bareboat charterers were insured under various marine policies, including P&I and hull cover, with MS Amlin Marine NV and other underwriters. Following the casualty, complex litigation arose between the insurers, the owners, charterers and other interested parties concerning:
Section 13A, inserted by the Enterprise Act 2016, came into force on 4 May 2017 and applies to contracts entered into on or after that date. It implies into every insurance contract a term that the insurer must pay any sums due in respect of a claim within a reasonable time, and provides a cause of action in damages where that term is breached.
The principal issues before the court in the Solomon Trader litigation included:
The court (paraphrased) emphasised that section 13A imposes an obligation to pay valid claims within a “reasonable time”, but that what is reasonable is highly fact-sensitive. The court considered, among other things, the size and complexity of the claim, the type of insurance, factors outside the insurer’s control, and whether the insurer had reasonable grounds for disputing the claim.
The court accepted that where an insurer has reasonable grounds to investigate or dispute liability, time spent doing so will not generally amount to a breach of the implied term, even if the dispute is ultimately resolved against the insurer. Investigation must, however, be conducted with reasonable diligence and not used as a pretext for delay.
The judgment also dealt with the substantive marine coverage issues, holding (paraphrased) that the policies responded to certain categories of post-casualty expenditure on terms reflecting the construction adopted, and apportioning the burden between hull and P&I interests accordingly.
Section 13A of the Insurance Act 2015 implies an obligation to pay valid claims within a reasonable time. “Reasonable time” is judged by reference to all the circumstances, including the type of insurance, the size and complexity of the claim, compliance with relevant statutory or regulatory rules, and factors outside the insurer’s control. An insurer with reasonable grounds for disputing a claim does not breach section 13A merely because it ultimately loses the coverage dispute, provided its conduct of the investigation and the dispute was reasonable.
The Solomon Trader is significant as one of the earliest substantive engagements with section 13A in a marine context, and confirms the following practical points:
For brokers, the case is a useful authority to cite when pressing insurers on slow-moving claims — particularly large or complex ones where delay can cause cash-flow or operational damage to the insured beyond the insured loss itself.
Author: Matt Bartlett, Director, Apex Insurance Brokers Ltd. Authorised and regulated by the Financial Conduct Authority (FRN 724952). Company registration 07014570 (England & Wales). This article is general information, not legal advice. Last reviewed: June 2026.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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