European insurers may expect to see increasing legal defense costs as pressure mounts to allow more securities class actions and other forms of litigation that have proliferated in the United States, a reinsurer reported.

That warning came in the "Casualty Specialty Update" from the London office of Guy Carpenter & Company, LLC, which deals with international casualty insurance developments, including inflationary pressures on indexation clauses in liability reinsurance treaties and the effect of the subprime crisis on European casualty portfolios.

In a statement released with the report, George Carrington, Guy Carpenter managing director, said: "The changing claims environment in Europe and the movement toward American-style class-action litigation are trends that merit particularly close attention. Although the extent to which the industry will have to deal with frivolous claims in Europe is still uncertain, it is safe to say that insurers increasingly will be obliged to defend claims, which will likely result in higher legal defense costs."

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