Tradespeople and small contractors struggling with late payment issues should welcome changes to the speed of commercial insurance claims payments as part of the Enterprise Act, which became law in May.

The package of measures in the Act will help the government deliver on many of its commitments, from cutting red tape and tackling late payment to boosting the quality and quantity of apprenticeships.

The Enterprise Act includes measures to:

• Establish a Small Business Commissioner to help small firms resolve issues such as late payment
• Include the actions of regulators in the government’s £10 billion deregulation target and increase transparency through annual reporting requirements
• Extend the successful Primary Authority scheme to make it easier for businesses to access consistent, tailored and assured advice from local authorities, giving them greater confidence to invest and grow
• Protect and strengthen the apprenticeship brand, introduce targets for apprenticeships in public sector bodies in England, and establish an Institute for Apprenticeships – an independent, employer-led body that will make sure apprenticeships meet the needs of business
• Create a legal obligation for insurers to pay claims to businesses within a reasonable time.

As such, unnecessary delays in claims payments should now be a thing of the past, giving the UK’s smaller contractors and sub-contractors some much needed certainty when they need to make a claim.

However, specialist insurer ECIC is warning contractors that they should still gain the support and advice of a specialist insurance broker and seek cover from insurers with a proven track record in their trade sector as this accumulated claims experience can have a huge bearing on the outcome of a claim.

The Enterprise Act creates a legal obligation for insurers to pay as promptly as is reasonable, and give policyholders a legal right to enforce this. Measures will include the introduction into every contract of insurance a requirement on the insurer to pay sums due within a reasonable time.

It will also give policyholders a contractual right to the payment of insurance claims within a reasonable time; and provide for general damages to be payable by an insurer where a policyholder suffers additional loss because of their insurer's unreasonable delay in payment.

Business Minister Anna Soubry said: “Together these measures will give a big boost to British enterprise. The Small Business Commissioner will help tackle the scandal of late payment – one of the leading issues for smaller firms. While the positive steps to reduce the burden of regulation and give more young people the opportunity to do an apprenticeship will benefit millions of businesses across the country.”

Image courtesy of Shutterstock/David Crockett