Willis Group Holdings has released an alert from the Company’s Financial Institutions (FI) practice, which looks at the meltdown in the U.S. subprime mortgage industry, which it notes is an “issue that has dramatically impacted individuals and financial institutions around the world marketplace.”
Willis said its alert “gives background on the situation, an explanation of what went wrong, examines the impact on other outside industries, and reviews how the insurance marketplace has reacted.”
The Alert also notes that “Directors and Officers insurers and Errors & Omissions insurers have seen a number of claims arising from the subprime issue,” but the claims made so far may be “just the tip of a huge iceberg,” Willis indicated.
Among some of the findings in the Willis report are the following:
— A worst case loss scenario for Directors & Officers (D&O) insurers could be in the realm of $3 billion;
— The downturn in the real estate market resulted in a 52 percent increase in the amount of title insurance claims paid in the second quarter of 2007 as compared to 2006;
— Foreclosure activity in the first half of 2007 was up 55 percent from 2006;
— Foreclosures for the month of July rose 93 percent from the prior July, and 115 percent from the prior August; and
— Forty-three states have reported an increase in foreclosure activity in 2007.
Willis explained that the Alert was “the direct work product of a task force that the FI Practice has created to monitor the situation and make recommendations to businesses. The task force consists of FINEX, Executive Risks and FI Associates in the U.S. and London.
“In the coming weeks, the team plans to issue an Alert on some insurance coverages that will receive more prominence as a result of the crisis, such as Mortgage Impairment, Foreclosed and Forced Placed covers. Further updates will be issued as circumstances develop.”
To down load a copy of the study go to: http://www.willis.com/news/Publications/FI_Alert_1007_Subprime.pdf
Source: Willis
Topics Directors Officers
Was this article valuable?
Here are more articles you may enjoy.
Soaring Insurance Costs Hit as US Buyers Finally Get a Break on Car Prices 
AIG Sues Newly Launched Dellwood Insurance and Its Founders 
Harvard Study Again Stirs the Pot on Demotech Ratings of Florida Carriers 
Grand Jury Indicts ‘Hole in Won’ Owner on Prize Insurance Fraud Charges 
