The collapse of US energy giant Enron is likely to submerge insurers in a series of long and bitter court cases. That’s the first indications coming out of the US as insurers take stock of the damage. Two major insurers have already indicated they may not honour D&O policies covering Enron’s most senior people.

The New York Times said the Royal Insurance Company of America (part of Royal & SunAlliance) and the St Paul Mercury Insurance Company have filed submissions in the Manhattan Bankruptcy Court stating that when they issued the policies they relied on what turned out to be “material misrepresentations” by Enron.

Nine other insurers that wrote D&O policies for Enron are expected to follow their lead. That would see some of the major figures in the controversial collapse exposed to a massive hit in shareholder claims and legal fees.