A domino effect could create a wave of company collapses if insurers buckle under the strain of enormous claims made after Tuesday's terrorist attacks, it is feared.
Industry experts today voiced worries that smaller players in the US reinsurance market in particular could be forced out of business.
Managing director for ratings firm Moody's, Mark Hewlett, said any crashes among retrocessionaires - those insuring the reinsurers - which leave unpaid bills could send shockwaves throughout the industry.
He said: “If a retrocessionaire can't pay the claim, it has an enormous knock-on effect within the industry. It's no different from me claiming on an insurer that goes bust.
“If an insurer claims on its insurer for a multi-million pound sum and the company's gone out of business, that wasn't in their equation.
“It is probably the greatest uncertainty.”
He described it as “a possibility” that some companies would go bust in the wake of the World Trade Center's destruction.
However, he continued: “If it's in the range of the figures quoted so far, it puts it on a par with Hurricane Andrew, when some people did go out of business. The real issue is liquidity because there are going to be some very large claims.”
He predicted reinsurers facing large losses could see their credit ratings cut but added: “Will the entire reinsurance market be downgraded? No. At the same as this happening, they are just repricing for the ren
