A court case hinging on £2m losses from violent civil unrest in Indonesia has been used to settle
the issue of when insurers become liable for multiple losses.

The case was brought by two Lloyd's syndicates – DP Mann and KJ Coles – as the insurers of an Indonesian supermarket chain, Ramayana, which had 21 stores looted and burned during the civil unrest in the country two years ago.

The two Lloyd's syndicates argued that their reinsurers in the case, Lexington, should bear the full cost of the losses – £2m. The insurance contract promised to pay a maximum sum for every insured “occurrence” resulting in a loss.

Lexington responded by arguing the compensation should be reduced as it alleged the riot had a “common cause” and that the damage constituted a single event rather than 21 separate incidents.

The Court of Appeal, however, sided with DP Mann and KJ Coles after deciding to hear the case because the two Lloyd's syndicates are based in London.

Simon Greenley, a partner in Reynolds Porter Chamberlain which represented DP Mann, said the case had clarified the position of insurers and reinsurers in relation to multiple non-marine insurance losses.

He said: “Regardless of whether the riots had a common cause or not, the court ruled that each of the 21 damaged supermarkets constituted a separate loss.”

Greenley added: “This ruling endorses the legal definition of what constitutes an ‘occurrence' in insurance circles.”

He said that if the court had ruled in Lexington's favour, then the two Lloyd's syndicates would only have been able to claim 50% of the cost of the losses from the reinsurer.