Fraud could hit US and UK insurance markets
The suspected $8bn (£5.54bn) fraud by Stanford Financial Group could hit the insurance industry in the USA and the UK as severely as the alleged Ponzi scheme of Bernard Madoff.
Scott Gilbert of Gilbert Oshinsky, a law firm with experience of corporate fraud cases, said it had already been approached by claimants relating to Stanford.
“We have been contacted by some entities in connection with [Stanford] and are deciding on whether to get involved,” he said.
“Although this looks to have the potential to be another Madoff, there is not nearly enough known about it publicly to say more.”
Gilbert said insurance claims were likely to arise not only from directors’ and officers’ and errors and omissions policies, but from fidelity insurance too.
Lloyd’s has admitted that Stanford International Bank – an affiliate of the group chaired by Sir Allen Stanford – has insurance arrangements with the market, but coverage is unlikely to extend to investment loss. It is researching what effect the alleged fraud will have on any coverage.
Brit Insurance, Ace Insurance and Talbot Underwriting are all thought to be exposed to potential claims relating to Stanford.