Standard Life Assurance Ltd v Ace European Group [2012] EWCA Civ 1713 is the case professionals cite when they want to understand how far an aggregation clause can reach. It concerned the phrase "one occurrence or series of occurrences consequent on or attributable to one source or original cause", and the Court of Appeal confirmed that this is the broadest of the standard aggregating wordings.
Standard Life faced numerous claims and made remediation payments to investors in one of its pension funds after the fund's exposure to certain assets caused a sharp fall in value. Standard Life sought to aggregate the payments so that they counted against the policy as a single matter, subject to a single retention. The insurer resisted, arguing the payments were too disparate to be aggregated.
The Court held that the payments were "consequent on or attributable to one source or original cause". The words "source" and "original cause" are deliberately wide. A "source" points to something from which the losses flowed; an "original cause" looks further back still. Because the payments all flowed from the same underlying exposure and the decisions taken about the fund, they shared a single source or original cause and could be aggregated.
A wide aggregating wording is a genuine double-edged sword. It reduces the number of excesses a professional pays and it can bring scattered losses within a single manageable matter. But it also means that a common root cause can pull a large number of claims into one limit of indemnity, so the effective ceiling of the cover is lower than the headline aggregate might suggest.
Firms arranging financial advisers' PI insurance should read the aggregating words carefully, because advice repeated across a client bank can share a single source. The point applies with equal force to insurance brokers whose placing practices are applied firm-wide. Apex talks these wordings through with professional firms so the limit purchased matches the exposure carried.
Where a policy uses source or original cause, the width works in both directions. Consider:
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.