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Lawsuits stemming from subprime mortgage writedowns are expected to generate $3.6 billion in costs for directors and officer (D&0) liability insurers, according to new report from commercial insurance research company Advisen Ltd. For its “The Crisis in the Subprime Mortgage Market and Its Impact on D&O and E&O Insurers” report, the New York-headquartered Advisen analyzed more than 181 already filed subprime-related lawsuits, data on write-downs from more than 120 financial institutions, securities class action settlement patterns and information on D&Os program from its own database. Advisen released the report on Feb. 11. Advisen’s chief insurance industry analyst and report author Dave Bradford said losses to insurers of D&O and errors and omissions liability (E&O) polices will be “significant, but not cataclysmic.” “As the subprime story unfolds, the potential impact on the insurance industry becomes clearer,” Bradford said. Yet the prospect of losses and the subprime mortgage crises hasn’t affected availability, cost or policy conditions of D&O and E&O policies, according to an survey of 110 insurance buyers released on Feb. 4. “Programs with less subprime exposure are seeing significant rate decreases and broader coverage,” said Advisen’s CEO Tom Ruggieri.

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