Insurance buyers should consider buying terrorism cover with a lower deductible to reflect the threat posed by smaller scale attack styles, warned Simon Sole, chief executive of Exclusive Analysis (EA).

With the dismantling of international terror networks in the wake of September 11, EA analysts have predicted that the biggest threat to UK property stemmed from home-grown, self radicalised terror groups conducting loosely coordinated small scale attacks.

Sole said: “There is a large and likely very interconnected network of committed young men in Europe and UK, from which dedicated attack cells can come together in under a year.”

But these groups were unlikely to have the capability to carry out a catastrophic scale event – in particular, a nuclear strike – he added.

The threat from outsiders was also slim. “Afghan insurgents pursue conflicting localised agendas, reducing the likelihood of unified internationalisation,” said Sole.

According to Aon, increased capacity in the stand-alone terrorism market had caused rates to decline by 50%-60% since 2002, while increased competition had helped to make the product more attractive.

Sole’s warning came at an IUA briefing entitled “The Evolution of al-Qaeda: Implications for Underwriters.”