Suicide bombers in Casablanca - with around 40 deaths reported - and terrorist threats on British Airway flights to Kenya have struck another blow to the troubled travel insurance industry.

The Association of British Travel Agents (ABTA) reported a 50% drop in sales this month blaming the impact of SARS and terrorism as the main culprits.

The events following the Iraq war have forced underwriters to cut back on the number of policies they are writing.

Columbus Insurance managing director Bryan Warburton said sales are down by between 20% and 30% this year, compared to last year, but travel sales to America have risen this week.

AXA travel manager Alison Patrick said: "There was a surge in travel insurance sales when Saddam Hussein's statue was toppled last month.

"But that did not last long."