Single act or omission

"Single act or omission" is a relatively narrow aggregation trigger that treats claims as one claim only where they arise from the same identifiable act or failure to act on the part of the insured.

Definition §

The "single act or omission" trigger aggregates claims that arise from one and the same act or one and the same failure to act on the part of the insured. It sits at the narrow end of the spectrum of unifying factors. Wider triggers such as "originating cause" or "series of related transactions" can sweep up claims that arise from different acts connected by a common root or by a relationship between underlying transactions; the single act or omission trigger does neither. It requires a single discrete piece of conduct from which all the aggregated claims flow. ^[1]

An "act" in this context describes a positive step taken by the insured — drafting a particular document, signing a particular release, executing a particular transfer — at an identifiable time. An "omission" describes a failure to take a step that the insured was under a duty to take. The act or omission must be the same act or omission for all the claims being aggregated; the trigger does not engage merely because each claim arises from a different but similar act or omission. That is the function of the broader "series" wording. ^[2]

The wording is closely related to the concept of an "event" analysed by Lord Mustill in Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026. An event was described as something that happens at a particular time, at a particular place and in a particular way, and an act or omission generally shares those features. The trigger is therefore typically applied narrowly. ^[3]

Legal / Regulatory basis §

The single act or omission trigger is the first limb of the composite aggregation provision in the SRA Minimum Terms and Conditions of Professional Indemnity Insurance. The MTC define one claim to include all claims arising from one act or omission, alongside three further limbs concerning series of related acts or omissions, the same act or omission in a series of related matters or transactions, and similar acts or omissions in a series of related matters or transactions where there is a connection. ^[4]

The trigger has been considered, often as part of broader composite arguments, in much of the leading aggregation case law. AIG Europe Ltd v Woodman [2017] UKSC 18 was decided on the fourth limb of the SRA wording but the Supreme Court's analysis of the wording as a whole confirms that the first limb is the narrowest of the four, requiring a single concrete act or omission rather than a pattern of similar conduct. ^[5]

The House of Lords decision in Lloyds TSB v Lloyds Bank Group Insurance [2003] UKHL 48 considered "originating cause" wording but contrasted it with narrower formulations including a single act. The judgment confirms that an originating cause is broader than a single act or omission because it can reach back through a chain of causation to find a common source whereas the single act trigger requires the act itself to be common to all the claims. ^[6]

Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026 underpins the analysis by establishing the event-cause distinction. A single act or omission, like a single event, is generally understood as something that happens at a particular time and in a particular way. ^[7]

The Insurance Act 2015 provides the general statutory framework of construction within which the trigger operates. ^[8]

How it works in practice §

A claims handler considering whether the single act or omission trigger is engaged typically asks two questions. First, is there an identifiable act or omission that is common to all the claims? Second, is that act or omission the operative cause of each of the claims being aggregated?

If the answer to both questions is yes, the trigger is engaged. A worked example is a single defective contractual document drafted once by the insured and then relied upon by multiple counterparties. The drafting itself is the single act, and each claim flows from it. Similarly, a single signed letter of advice circulated to several recipients, all of whom suffer loss as a result, is likely to engage the trigger.

If, however, the conduct giving rise to the claims is not in fact a single act but a series of similar acts performed on different occasions, the single act or omission trigger does not engage. A solicitor who repeats the same drafting error on twenty separate retainers has committed twenty separate acts, not one. To aggregate those claims, the policy would need to engage either the series wording or some broader trigger such as originating cause. ^[9]

The narrowness of the single act or omission trigger generally favours the insured where the per-claim limit is the binding constraint, because related but distinct acts remain separate claims each attracting their own limit. It can disadvantage the insured where the aggregate limit is the binding constraint, because separate claims each consume their own slice of the aggregate.

Common variations §

The most common variations of the single act or omission trigger are linguistic rather than substantive. Some wordings refer to a single "act, error or omission", which is widely understood as substantively equivalent to a single act or omission. Others refer to one "wrongful act", with "wrongful act" then defined elsewhere in the policy; this style is typical of directors' and officers' liability policies and management liability policies.

The trigger is frequently combined with other unifying factors. The SRA MTC composite wording combines the single act trigger with three series-based triggers. Open market PI wordings often combine a single act trigger with an originating cause trigger to provide both a narrow and a broad route to aggregation, with the insurer free to invoke whichever produces aggregation on the facts.

Some wordings supplement the trigger with a temporal element — for example by deeming acts or omissions occurring in the same continuous period to be a single act. This is less common in the SRA MTC context but appears in some financial institutions' PI and crime wordings.

Example §

A specialist tax counsel produces a single written opinion advising a client that a particular SDLT planning structure is effective. The client passes the opinion to twelve associated companies within its corporate group, each of which implements the structure on transactions completed shortly afterwards. HMRC subsequently challenges the structure successfully and each of the twelve companies suffers a tax loss and a penalty.

Counsel's professional indemnity policy contains a single act or omission aggregation trigger and illustrative limits of £5,000,000 per claim and £15,000,000 in the aggregate, with a £50,000 per-claim excess.

The drafting of the opinion is a single identifiable act. Each of the twelve companies' losses flows from reliance on that single opinion. The trigger is likely to engage and the twelve claims would be aggregated to a single £5,000,000 limit with one £50,000 excess.

If, instead, counsel had given twelve separate oral advices to the twelve companies in twelve separate consultations, those would be twelve distinct acts. The single act trigger would not engage. The claims would remain separate, each attracting its own £5,000,000 limit and its own £50,000 excess, subject to the £15,000,000 aggregate.

These figures are illustrative; the actual outcome depends on the wording and the facts.

See also §

• /wiki/aggregation-clause/ — the mechanism in which this trigger sits
• /wiki/originating-cause/ — broader unifying factor
• /wiki/series-of-related-matters/ — broader SRA MTC trigger
• /wiki/series-of-related-transactions/ — broader SRA MTC trigger analysed in AIG v Woodman
• /wiki/per-claim-limit/ — financial control that aggregation engages
• /wiki/aggregate-limit/ — the period-wide cap
• /wiki/professional-indemnity-insurance/ — the line of business

References §

1. ↑ SRA Minimum Terms and Conditions of Professional Indemnity Insurance — https://www.sra.org.uk/solicitors/standards-regulations/indemnity-insurance-rules/
2. ↑ AIG Europe Ltd v Woodman [2017] UKSC 18 — https://www.supremecourt.uk/cases/uksc-2016-0033.html
3. ↑ Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48 — https://publications.parliament.uk/pa/ld200203/ldjudgmt/jd031106/lloyds-1.htm
4. ↑ Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026 (HL)
5. ↑ Insurance Act 2015 — https://www.legislation.gov.uk/ukpga/2015/4