The impact on the errors and omissions insurance sector of claims prompted by the alleged Ponzi scheme run by Bernard Madoff will be astronomical and worldwide, an E&O specialist warns.
Jonathan Legge, a managing director with Mercator Risk Services, said while it is too early to estimate a worst-case scenario in terms of total claim costs, the E&O reverberations will likely register as investment advisors and banks that invested client money through Mr. Madoff are hit with actions by investors.
Mr. Legge said insurers initially may have been looking at their exposure to Mr. Madoff specifically, but now they are finding that many big investment advisors, funds and banks had significant money from clients invested through Mr. Madoff. Some had as much as 40 percent of their clients' money invested through Mr. Madoff, Mr. Legge reported.
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