AXA Reinsurance (UK) plc v Field [1996] 1 WLR 1026
Citation
- Full case name: AXA Reinsurance (UK) plc v Field (sued on his own behalf and on behalf of all other members of Lloyd’s Syndicate No 204 for 1991)
- Reported at: [1996] 1 WLR 1026; [1996] 2 Lloyd’s Rep 233
- Court: House of Lords
- Judgment date: 20 June 1996
- Panel: Lord Mackay of Clashfern LC, Lord Goff of Chieveley, Lord Mustill, Lord Slynn of Hadley, Lord Hoffmann
- Subject: reinsurance; aggregation of losses; “originating cause” and “event”
Issue
Aggregation clauses decide how many losses there are for the purposes of a limit or a deductible. A clause that gathers up many individual claims into one aggregated loss may help an insured to reach the attachment point of an excess layer, or may exhaust that layer far sooner than expected. Which way it cuts depends entirely on the unifying concept the clause uses.
The question in this case was whether a clause providing for aggregation of claims “arising from one originating cause” meant the same thing as a clause providing for aggregation of losses “arising out of one event”.
Decision and ratio
The House of Lords held that the two expressions differ substantially. Lord Mustill, with whose speech the other members of the House agreed, explained why at page 1035:
“In my opinion these expressions are not at all the same, for two reasons. In ordinary speech, an event is something which happens at a particular time, at a particular place, in a particular way. … A cause is to my mind something altogether less constricted. It can be a continuing state of affairs; it can be the absence of something happening. Equally, the word ‘originating’ was in my view consciously chosen to open up the widest possible search for a unifying factor in the history of the losses which it is sought to aggregate. To my mind the one expression has a much wider connotation than the other.”
An event, then, is tied to a time, a place and a manner. A cause need not be: it can be a continuing state of affairs, or an omission. Adding the word “originating” widens the search further still, back to wherever a common origin can reasonably be found.
How the courts have used it
Lord Mustill’s formulation has been treated ever since as the starting point for construing any aggregation wording. Later decisions have applied it to a range of formulations, including “one source or original cause”, and have developed the practice of testing whether losses arise from one event by reference to unities of cause, locality, time and, where human action is involved, the circumstances and purposes of the people responsible.
The result is a spectrum. At one end sit narrow wordings tied to a single occurrence; at the other sit broad wordings that trace losses back to a common origin, which will usually aggregate the most.
Why it matters for insurance
Aggregation is the single most commercially significant clause in many professional indemnity, financial institutions and reinsurance wordings, and it is the one buyers understand least. Whether a series of similar claims counts as one loss or as fifty decides whether the deductible bites once or fifty times, and whether the limit is exposed once or fifty times.
The direction of the benefit is not fixed. A firm facing many small claims from a single systemic failure usually wants them aggregated, so that only one excess applies. A firm facing a small number of very large claims usually wants them treated separately, so that each has its own limit. The right answer depends on the shape of the firm’s exposure, which is exactly why the wording should be a placement decision rather than an accident of the insurer’s standard form.
Because the words carry such different weight, comparing quotations on limit and premium alone is misleading. Two policies with the same headline limit can behave completely differently on the same set of facts.
See also
- Caudle v Sharp — aggregation by originating cause in the Lloyd’s market
- Spire Healthcare v RSA — aggregation of many claims arising from one practitioner
- Cox v Bankside — aggregation and the exhaustion of limits
- Aggregation clause — how the common aggregation wordings compare
References
- AXA Reinsurance (UK) plc v Field [1996] 1 WLR 1026; [1996] 2 Lloyd’s Rep 233 (House of Lords)
- Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] EWCA Civ 688
- Standard Life Assurance Ltd v Ace European Group [2012] EWHC 104 (Comm)
Frequently asked questions
What is the difference between an event and an originating cause?
An event is something that happens at a particular time, at a particular place and in a particular way. A cause is less constricted: it can be a continuing state of affairs or the absence of something happening. Adding the word originating widens it further, opening the search for a unifying factor as far back as a common origin can reasonably be found.
Is a wide aggregation clause good or bad for the insured?
It depends on the shape of the exposure. A wide clause helps a firm facing many small claims from one systemic failure, because a single deductible applies. It hurts a firm facing several large claims, because one limit has to answer for all of them.
Why can two policies with the same limit behave so differently?
Because the aggregation wording decides how many losses there are. The same set of facts can produce one claim under one wording and many claims under another, which changes how often the excess applies and how far the limit is exposed.
This page is insurance information for UK businesses, not legal advice. It summarises a reported judgment and explains why insurance buyers and brokers refer to it; it is not a substitute for reading the judgment or taking advice on your own facts. Case summaries are necessarily short and omit detail. Position stated as at August 2026.
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