Insurance industry luminary Maurice Greenberg has predicted further pain for insurers stemming from US subprime mortgage defaults.

As world markets slowly recover from the subprime mortgage meltdown, the former head of AIG believes insurers are not yet in the clear.

International broker Marsh has previously stated the contagion in insurance circles from the subprime crisis should be contained to a rise in liability claims - particularly in directors' and officers' (D&O) and errors and omissions (E&O).

But Mr Greenberg contests the view that insurers won't suffer any further problems. Speaking at the International Union of Marine Insurance in Copenhagen last week, he said many companies will suffer from the subprime debacle. "A lot of it will end up in the insurance market."

Mr Greenberg stepped down as Chairman and CEO of AIG in March 2005 and is now head of Atlanta-based CV Starr & Co.

Last month, Marsh Financial Institutions Practice MD Jill Sulkes urged insurers, hedge funds, banks and ratings agencies to examine their D&O and E&O exposures.

"Although the D&O and E&O insurance market has been largely stable, if there are a high number of costly claims under these insurance policies, this trend may reverse and costs may begin to rise," she said.