The millennium bug is expected to cost insuring companies billions in legal costs and claims according to an estimate by Milliman and Robertson Inc., an actuarial firm in the US.

(Note: The Y2K problem happens on systems programmed with the earlier generation software which coded the year with just the last 2 digits instead of all 4, to save on memory and program size. But in the year 2000 these programs would misbehave- with just 00 in the year's slot – reading it as 1900 instead of 2000.)

The firm estimates that insurance companies could end up paying out anywhere between $15 billion to $35 billion for claims and legal costs due to business interruptions or problems over misbehaving computers. This could result in small to medium insurance companies going under. Interestingly, it is expected that a large chunk of about $5 billion to $10 billion would go towards the insurers fighting their customers in court over what is exactly covered under their policy. A much smaller amount of about $4 to $8 billion could go towards actually paying liability claims of companies sued against by customers. Lost revenue claims by businesses undergoing temporary shutdown would account for about $2 to $4 billion while the rest would go towards professional errors-and -omissions cases.

The company states that this would rank among the top insurance claim cases in the world.