Part 5: Late Payment of Insurance Claims Section 29: Contracting out of the implied term about payment of claims
This section amends Part 5 of the Insurance Act 2015 which deals with contracting out of the substantive provisions of the Act.
	The new section 16A inserted by section 23(1) follows the approach of the Insurance Act 2015 and makes different provision in relation to consumer insurance contracts and non-consumer insurance contracts which attempt to contract out of the term implied by section 13A. The terms "consumer insurance contract" and "non-consumer insurance contract" are defined in section 1 of the Insurance Act 2015. For these purposes, a term of an insurance contract "contracts out" of the implied term if it puts the insured in a worse position as regards the matters covered by section 13A than the insured would be in by virtue of the implied term.
	Section 16A(1) ensures that (like the rest of the Insurance Act 2015), a term of a consumer insurance contract that purports to contract out of the implied term is of no effect. The obligation to pay valid claims within a reasonable time is therefore mandatory and an insurer cannot use a term of the contract to put a consumer in a worse position than they would be in by virtue of the implied term.
	Section 16A(2) to (4) deal with contracting out in non-consumer insurance contracts. Subsection (2) prevents a contract term from contracting out of the implied term so far as relating to the consequences of a deliberate or reckless breach of it. Under subsection (4) it is generally possible to contract out of the implied term provided that the insurer complies with the transparency requirements set out at section 17 of the Insurance Act 2015. Under section 17 the insurer must give notice of the term to the insured and the term must be clear and unambiguous as to its effect.
	Section 29(2) amends section 17(1) of the Insurance Act 2015, which defines what a "disadvantageous term" is for the purposes of the contracting out provisions in that Act, so that it applies also to a "disadvantageous term" of the kind referred to in the new section 16A(4).
	The implied term about payment will apply only to insurance contracts entered into after the provisions come into force. These provisions have UK wide extent, as do the other provisions of the Insurance Act 2015. They deal solely with reserved or non-devolved matters.