The cost to insurers of claims against directors of companies caught up in the US sub-prime mortgage crisis could be more than $2bn, according to Guy Carpenter, the reinsurance broker. Financial Times
Guy Carpenter, part of Marsh & McLennan, estimates that this level of insured losses could be incurred on directors and officers’ policies, which protect a director or officer of a company from paying out of their own pocket in a case arising from their duties as a director of a corporation.
He said: "There was never any doubt that the sub-prime mortgage market collapse would have an insurance impact. The question was one of extent. While estimates vary from $1bn to $3bn, it looks like the reality may settle at the upper end of the scale. The final answer will not come until 2008 or maybe even 2009, but history, litigation tendencies and capital markets point toward the worst-case scenario.”