Accountants' professional indemnity (PI) cover is set to rocket as a result of legal action being brought against Andersen, the auditor of failed energy giant Enron.

Andersen is accused of burying evidence of Enron's impending collapse and analysts have estimated that total claims could be as high as $10bn (£6.9bn).

A spokesman for broker Dickson Manchester, which specialises in PI, said Andersen is unlikely to have adequate insurance to cover all claims.

"Andersen is one of the big five, so this will have the cumulative effect of hardening rates for accountants.

"I would doubt whether it has more than £1bn cover, so if the total claims are genuinely $10bn it is unlikely it would be able to pay."

Andersen, which is already paying hundreds of millions of dollars to settle lawsuits connected to earlier accounting scandals, now faces ruin.

The company has also been named in suits relating to failed Australian insurer HIH and the Arizona Baptist Foundation, which failed owing investors $590m (£410m).

Andersen's broker is understood to be Marsh.

Analysts say US energy giant Enron carried about $300m (£209m) in directors' and officers' (D&O) insurance.

Enron is facing multi-shareholder lawsuits because of the steep drop in the company's stock price as it neared a filing for bankruptcy court protection late last year.

Companies in financial difficulty have seen their D&O insurance premiums soar by 300% to 400%, according to research from broker Willis.

The report said companies with healthy balance sheets have experienced increases of 25% to 40%.

It adds: "For financially strapped companies, the sky may be the limit."