THE insurance industry could face a $6bn (£3bn) bill for claims against directors relating to the sub-prime mortgage lending crisis. Daily Telegraph

William Sturge, a partner at law firm LG, said legal action is expected to trigger many directors and officers’ insurance policies.

'The crisis has escalated from the mortgage providers to the investment banks, and fund managers trading in bonds,' he said. 'D&O claims across the market could be significantly greater than previous estimates – perhaps twice the $3bn figure quoted by Bear Stearns in September.'

David Small, an insurance analyst at Bear Stearns, said the bank had not revised its forecasts although 'obviously there are more companies that will fall under the criteria than when we initially published our estimate'.