{"id":57,"date":"2012-03-20T00:00:00","date_gmt":"2012-03-20T00:00:00","guid":{"rendered":"https:\/\/fenchurchlaw.hostingsystems.co.uk\/sg\/blog\/2012\/03\/20\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\/"},"modified":"2024-08-21T17:02:18","modified_gmt":"2024-08-21T16:02:18","slug":"high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies","status":"publish","type":"post","link":"https:\/\/fenchurchlaw.com\/en-sg\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\/","title":{"rendered":"High Court decision on the recovery of \u201cmitigation costs\u201d under Professional Indemnity Insurance Policies"},"content":{"rendered":"<p><strong>Standard Life Assurance Ltd v ACE European Group [2012] EWHC 104 (Comm)<\/strong><\/p>\n<p>The Claimant owned an investment fund containing a substantial proportion of asset-backed securities. Following the collapse of Lehman Brothers in 2008, the asset-backed securities became increasingly illiquid, making their valuation more and more subjective. <!--more--><br \/>\nThe Claimant decided to switch to a different source of prices, which resulted in a fall in value of units of the fund by 4.8%. There followed a mass of complaints, and due to the Claimant\u2019s fears that many of its customers would make a claim, it made a cash injection into the fund of over \u00a3100 million. <\/p>\n<p>The Claimant then sought to recover the cash injection from the Defendant, which was the Claimant\u2019s professional indemnity insurer, on the basis that the cash injection constituted \u2018mitigation costs\u2019. Under the insurance policy mitigation costs were described as:<\/p>\n<p><em>\u201c&#8230;any payment of loss, costs or expenses reasonably and necessarily incurred by the assured in taking action to avoid or reduce a third party claim (or to avoid or reduce a third party claim which may arise from a fact, circumstance or event) of a type which would have been covered under this policy\u201d.<\/em><\/p>\n<p>The Defendant insurers argued that the payments were made for the dominant purpose of reducing damage to the Claimant\u2019s brand, and not for avoiding claims and, as such, were not covered under the policy.  <\/p>\n<p>Mr Justice Eder rejected this argument and ruled in favour of the Claimant, deciding the correct approach was to look at the intended effect of the payment, not the motive behind it. The mitigation clause was not concerned with purpose, only with whether the intended result was to reduce claims.  <\/p>\n<p>The Judge also dismissed the argument that there should be apportionment to reflect the fact that there may have been mixed motives (to reduce claims, and to protect reputation). He also commented that insurers should not inappropriately attempt to apply the marine property insurance principle of apportionment to professional liability policies.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Standard Life Assurance Ltd v ACE European Group [2012] EWHC 104 (Comm) The Claimant owned an investment fund containing a [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[19,53,54,55,56],"class_list":["post-57","post","type-post","status-publish","format-standard","hentry","category-news","tag-insurance","tag-high-court","tag-lehman-brothers","tag-professional-indemnity","tag-standard-life"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>High Court decision on the recovery of \u201cmitigation costs\u201d under Professional Indemnity Insurance Policies - Fenchurch Law APAC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fenchurchlaw.com\/en-sg\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"High Court decision on the recovery of \u201cmitigation costs\u201d under Professional Indemnity Insurance Policies - Fenchurch Law APAC\" \/>\n<meta property=\"og:description\" content=\"Standard Life Assurance Ltd v ACE European Group [2012] EWHC 104 (Comm) The Claimant owned an investment fund containing a [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fenchurchlaw.com\/en-sg\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\/\" \/>\n<meta property=\"og:site_name\" content=\"Fenchurch Law APAC\" \/>\n<meta property=\"article:published_time\" content=\"2012-03-20T00:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-21T16:02:18+00:00\" \/>\n<meta name=\"author\" content=\"Michael Hayes\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Michael Hayes\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/\"},\"author\":{\"name\":\"Michael Hayes\",\"@id\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/#\\\/schema\\\/person\\\/0dc618622f4d437bfe590862d6078dd7\"},\"headline\":\"High Court decision on the recovery of \u201cmitigation costs\u201d under Professional Indemnity Insurance Policies\",\"datePublished\":\"2012-03-20T00:00:00+00:00\",\"dateModified\":\"2024-08-21T16:02:18+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/\"},\"wordCount\":343,\"commentCount\":0,\"keywords\":[\"Insurance\",\"High Court\",\"Lehman Brothers\",\"professional indemnity\",\"Standard Life\"],\"articleSection\":[\"News\"],\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/\",\"url\":\"https:\\\/\\\/fenchurchlaw.com\\\/en-sg\\\/high-court-decision-on-the-recovery-of-mitigation-costs-under-professional-indemnity-insurance-policies\\\/\",\"name\":\"High Court decision on the recovery of \u201cmitigation costs\u201d under Professional Indemnity Insurance Policies - 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