In Axis Specialty Europe v Discovery Land Company LLC and others [2024] EWCA Civ 7 the Court of Appeal has dismissed insurers’ appeal against the decision of Knowles J on the meaning of ‘condoning’ dishonesty, and on the aggregation of claims under a policy under the SRA Minimum Terms and Conditions of professional indemnity insurance (MTC). Insurers are seeking leave to appeal on the aggregation issue, under which, broadly, multiple similar claims may be subject to a single limit of indemnity.
Aggregation is one of the more common coverage issues on which we are instructed, and we have acted in substantial arbitrations where this has been an issue. It can be relevant in a variety of circumstances, such as acting for multiple buyers in the purchase of units in leasehold property, and investment schemes. Key to managing this risk is identifying the firm’s exposure to multiple similar claims, particularly where there is a volume of similar work which may appear very profitable at the time, but expose the firm way beyond its indemnity limit.
An article by Frank Maher on this and other coverage issues and how to avoid them, Mind the (SRA) Insurance Gaps, is in New Law Journal N.L.J. 2024, 174(8054), 7. (Subscription, but a free trial is available.)
We have considerable experience of advising firms on how to manage successor practice issues under the MTC. This is an area where mistakes can render a firm uninsurable, but it is often possible to avoid the risk if care is taken. Surprisingly the effect of the successor practice provisions is widely misunderstood within the profession: they do not make a successor practice liable for the acts and omissions of a prior practice but instead create an obligation to insure it. A recent example of falling into this error (obiter) can be found in Pead v Prostate Cancer UK and Others [2023] EWHC 3224 (Ch).
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