The sub-prime mortgage crisis took centre stage for a webinar hosted online by the Risk and Insurance Management Society (RIMS).

The discussion, entitled Insurance Coverage Issues Arising Out of the Sub-prime Mortgage Crisis, reviewed the far-reaching effects of the sub-prime crisis that are beginning to impact the risk management and insurance industries.

It also gave an overview of the various entities potentially affected by the crisis and the nature of the liabilities they may face, as well as debating some of the major issues organisations should be made aware of to properly access insurance coverage, including problems that might arise with settlements of sub-prime liabilities or in litigating coverage for such claims.

The panellists included Howrey LLP partners Robert Jacobs, Andrew Reidy and Koorosh Talieh, and Dr. Faten Sabry, vice-president for NERA Economic Consulting.

Dr. Sabry kicked-off the event by giving an overview of the start of the crisis and an explanation of the main events that came to a head to cause the current crisis.

She spoke about sub-prime 101, securitisation and the key players, what went wrong - including a decline in housing prices, lax underwriting standards and an increase in interest rates, and the potential litigation facing homeowners, lenders, trusts, individuals, pension funds, mutual funds, insurance companies and CDOs.

Mr. Jacobs went on to talk about the regulatory action and civil litigation that have arisen from the crisis to date, highlighting the fact that every entity involved in the process from loan origination through securitisation, could face significant liabilities through regulatory action and/or litigation, pointing out some of the entities that could become the targets of such action.

Mr. Reidy and Mr. Talieh then covered the issues policy holders may face in accessing insurance coverage in terms of sub-prime mortgage loss or liability, touching on potentially-applicable insurance policies, insurance coverage issues and how each type of coverage could apply.

Other subjects debated included the duty to defend/advancement of defence costs issues (including control of the defence and selection of counsel), the availability of entity coverage, the definition of securities claim, when a "wrongful act" is alleged and if any exclusions apply.

Insurable losses, settlement and litigation issues, insurance considerations in settling the underlying sub-prime case and the obstacles in litigating insurance claims completed the talk.