Section 13A of the Insurance Act 2015 implies a term into every insurance contract that the insurer must pay sums due within a 'reasonable time' after a valid claim. Since 4 May 2017, breach of that term has been actionable in damages. The statute does not define reasonable time in days or weeks. Instead, s.13A(3) sets out the factors a court must weigh, and leaves the assessment to the tribunal on the facts. This entry looks at how that assessment is being fleshed out in practice.
Under s.13A(3), a reasonable time includes a reasonable time to investigate and assess the claim. What counts as reasonable depends on the circumstances, but the section lists four factors: 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. If the insurer shows on the balance of probabilities that it had reasonable grounds for disputing the claim, s.13A(4) provides that non-payment while the dispute is ongoing does not itself breach the implied term — though the insurer's conduct during the dispute may still be relevant.
The first significant Court of Appeal consideration came in Quadra Commodities SA v XL Insurance Co SE [2022] EWCA Civ 1554. The court accepted that s.13A does not require insurers to move at unrealistic speed on genuinely complex commercial claims, and that a reasonable investigation window is built into the section. The judgment gave weight to the sophistication of the insured, the international dimension of the loss and the volume of documentary material — but it also confirmed that once an insurer has enough information to make a decision, further delay is not protected simply because further theoretical enquiries could be made.
In Sky UK Ltd v Riverstone Managing Agency Ltd [2024] EWCA Civ 1567, the court returned to the theme in a property damage context. The judgment reinforced that s.13A obliges insurers to conduct their investigation with reasonable diligence, and that periods of inactivity, unexplained silence, or repeated requests for material already provided will weigh against the insurer when the court measures the overall timeline. The insurer's internal resourcing constraints are not, in themselves, factors outside its control.
Although s.13A is a private law remedy, the regulatory perimeter is relevant under s.13A(3)(c). The FCA Handbook at ICOBS 8.1 requires insurers to handle claims promptly and fairly, provide reasonable guidance, and not unreasonably reject claims. The Financial Ombudsman Service, though its jurisdiction is separate, uses the DISP 1.6 timescales — acknowledgement within a few business days, substantive response within eight weeks — as a persuasive marker of what a reasonable service standard looks like. Neither ICOBS 8.1 nor DISP 1.6 sets a hard s.13A deadline, but the courts treat sustained departures from those expectations as evidence that the insurer's timeline was not reasonable.
Drawing the strands together, the pattern that has emerged in professional indemnity and comparable liability lines runs roughly as follows. A cover decision — whether the notification is accepted, reserved on or declined — would ordinarily be expected within 30 to 60 days of a properly presented notification. Substantive investigation of a straightforward claim would be expected to conclude within around 90 days. Settlement, once quantum has been established, would be expected within a reasonable window thereafter — often 30 to 60 days for uncomplicated matters. These are not statutory tramlines. They are the pattern the case law and the regulatory framework tend to describe as reasonable in the absence of unusual complexity.
Worked example (illustrative, not a real case). A firm notifies a professional indemnity claim in January 2024. The facts are simple, cover is accepted immediately, and quantum is agreed with the third party within four months. The insurer then takes 11 months from notification to make a substantive settlement offer, citing 'further investigation required' but never specifying what remained outstanding. Comparable claims in the same PI line would ordinarily be settled in four to six months. The court finds that the delay beyond month six was unreasonable within s.13A, that the insurer's rationale did not meet the s.13A(4) reasonable-grounds threshold once quantum was agreed, and that the firm suffered cash-flow disruption and additional professional fees as a result. Damages under s.13A are assessed at £22,000.
Policyholders can put themselves in the strongest position under s.13A by documenting delay in real time. That means keeping a dated chronology of every request from the insurer and every response, preserving correspondence and file notes, recording the business impact as it accrues rather than reconstructing it later, and asking the insurer in writing to identify the specific outstanding items whenever an investigation extends beyond the timelines above. A contemporaneous record is the evidence a court will look at if a s.13A argument becomes necessary.
For the underlying provision, see Insurance Act 2015 section 13A — payment within a reasonable time and PI. Sector context on how the framework applies in practice is covered in the solicitors' PI, accountants' PI and IFA PI pillars.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.