Lloyds TSB v Lloyds Bank Group Insurance: the aggregation point
The case in one line
In Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Company Ltd [2003] UKHL 48 (House of Lords, 31 July 2003) the House of Lords held unanimously that some 22,000 pensions mis-selling claims did not aggregate under an act or omission clause, so the £1 million deductible applied to each claim rather than once.
This is a short note focused on the aggregation ratio. For the full facts, the constitution of the House, the reported citations and the wider commentary, see the full entry: Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48.
The wording and the argument
The clause aggregated “a series of third party claims” that “result from any single act or omission (or related series of acts or omissions)” for the purposes of applying the deductible.
The insured argued that the unifying act or omission was a group-level failure to train and supervise the sales force properly. If that worked, one deductible applied to the whole book of mis-selling claims. If it did not, the deductible exceeded every individual claim and the policy paid nothing.
What the House of Lords held
The claims did not aggregate. Each claim resulted from a separate breach, by the individual representative who advised that customer, of the applicable conduct-of-business rules. The failure to train and supervise was an antecedent cause of the problem but was not the act or omission from which each claim resulted.
Their Lordships also refused to read the bracketed words as if they were an “originating cause” clause. The two formulas are distinct: an originating cause wording searches for a common root however remote, while an act or omission wording asks what each claim actually resulted from.
The practical point for wordings
Where a firm’s realistic worst case is many small claims flowing from one bad process — a flawed advice model, a defective template, a systemic compliance failing — an act or omission aggregation clause may not gather them up. A wider originating cause or source-and-original-cause formula is needed for that.
The reverse is true where the concern is a single large transaction generating multiple claims and the argument is about the limit rather than the excess. Aggregation is not good or bad in itself; it depends on which end of the policy is being tested. That is a wording conversation to have at renewal, not after a notification.
See also
- Full case entry: Lloyds TSB v Lloyds Bank Group Insurance — facts, citation, decision and significance
- AIG Europe v Woodman — the solicitors’ minimum terms aggregation formula in the Supreme Court
- Cox v Bankside Members Agency Ltd — aggregation and limits in the Lloyd’s errors and omissions litigation
- Aggregation clause — the wording families explained
References
- Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Company Ltd [2003] UKHL 48
- AIG Europe Ltd v Woodman [2017] UKSC 18
Frequently asked questions
What is the ratio of Lloyds TSB v Lloyds Bank Group Insurance?
That an aggregation clause grouping claims which result from a single act or omission, or a related series of acts or omissions, requires the act or omission relied on to be one from which each claim actually resulted. A remote systemic failing such as inadequate training does not satisfy it.
Which is wider, an act or omission clause or an originating cause clause?
An originating cause clause is wider. It looks for a common source or root of the claims however remote, whereas an act or omission clause asks what each claim resulted from. The House of Lords in this case refused to construe the one as equivalent to the other.
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.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.