Supreme Court rules in favour of insurers multiple claims liability cap

The Supreme Court has unanimously sided in favour of leading insurance company AIG Europe in interpreting the rules that govern the way insurers can combine multiple claims.

In overturning the Court of Appeal’s ruling that the matters or transactions had to have an “intrinsic” relationship with each other, the Supreme Court said this formulation was not “necessary or satisfactory”.

Lord Toulson gave the lead judgement in AIG Europe Ltd v Woodman & Ors in which the outcome is the difference between AIG facing claims worth more than £11m, rather than the £3m limit for a single claim.

The case concerned actions being brought on behalf of 214 people who lost money in failed holiday property schemes in Turkey and Morocco, and alleged that the now defunct International Law Partnership had been negligent in protecting their money.

Rejecting the Court of Appeal’s decision, Lord Toulson said: “With respect to the Court of Appeal, I do not consider its formulation to be necessary or satisfactory. My difficulty is with the word ‘intrinsic’ itself and what it means in this context. It is possible to describe things or people as having certain intrinsic qualities or characteristics, but it is a more elusive term when used as a descriptor of a relationship between two transactions.”

Toulson continued: “Use of the word ‘related’ implies that there must be some interconnection between the matters or transactions, or in other words that they must in some way fit together, but the Law Society saw fit after market negotiation not to circumscribe the phrase ‘a series of related matters or transactions’ by any particular criterion or set of criteria… determining whether transactions are related is therefore an acutely fact sensitive exercise.”

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