Some of the City's biggest employers could be drastically underinsured and unable to pay out life cover to the families of employees killed in the event of a terrorist attack, claimed a report.
It said the insurance crisis had arisen after insurers introduced caps limiting the amount payable to claims relating to employees who die at work.
According to the report, some caps were so low that the payouts might not cover the policies of more than a few senior executives.
Caps, or single event limits, have been gradually written into employment contracts since the September 11 attacks in 2001, claimed the report. It said they could be pitched as low as £50m to £100m.
Insurance experts said the problem could lead to a rush of litigation as City employees seek reassurance that their families would be adequately compensated in the event of their deaths, revealed the report.
Of the leading city employers surveyed in the report, only Barclays admitted that its employee benefits plan had a single-event cap, while HSBC, Royal Bank of Scotland and Linklaters said their employees were fully covered for life insurance payout, concluded the report.
