The US Terrorism Risk Insurance Act (TRIA) is set to be extended beyond the original end date of 2005 to the dismay of terrorism underwriters at Lloyd's.
Under the terms of TRIA, which was signed into law by President George Bush in 2002, the US Treasury effectively reinsures terrorism risks.
Brit chief executive Dane Douetil said he understood there were plans to extend the TRIA programme beyond the current expiry date of 31 December 2005.
"Our intelligence is that it [TRIA] will be extended, though this is unlikely to happen before the [Presidential] election," Douetil said.
A spokeswoman for the US Treasury refused to rule out an extension to TRIA.
"We are looking for feedback from interested parties as to whether it should be extended," said the spokeswoman.
But she added that TRIA was only a temporary initiative and that there had been no moves as yet to extend the programme.
Any extension of TRIA would cause consternation among terrorism underwriters at Lloyd's.
"My terrorism underwriters wish it not to be renewed as it [the end of TRIA] would lead to more open market demand," said Douetil.