LAWFUEL – The Legal Newswire – London insurers face the prospect of claims worth hundreds of millions of pounds arising from the sub-prime mortgages debacle in the United States, as class-action lawsuits begin to pour into American courts.
The Times newspaper reports that at least ten claims have been lodged against mortgage providers in the US, claiming that the banks hid from shareholders the true risks posed by the home loans that they had sold to people with bad credit histories. Ratings agencies and investment banks face litigation from investors who bought asset-backed securities based on the bad loans, and lawyers and accountants who advised on the creation and purchase of the securities are in the firing line as well.
The companies being hit by multimillion-dollar legal actions are expected to claim on their errors and omissions (E&O) and directors’ and officers’ (D&O) insurance to cover the cost of their defence.
An underwriter for a leading insurer said: “There’s D&O and E&O exposure all over the place. Wherever someone had their fingers in the pie, someone’s going to get sued.”