The financial crisis could cost insurers $6bn on policies that protect US companies and directors from legal costs, insurance consultants have warned.
Disgruntled investors hoping to recover their losses have filed a spate of lawsuits against companies and their executives since 2007, resulting in a dramatic increase in claims activity under so-called directors and officers (D&O) policies.
More than three-quarters of public companies with assets of more than $250m are facing shareholder suits, according to Advisen insurance consultants. Towers Perrin and Cornerstone Research, which track class- action lawsuits, said 210 securities class actions were filed last year, a 19 per cent increase over 2007. Almost half of the litigation activity in 2008 involved financial services companies.