The real problems of finding cover have led to anxious customers. Andy Cook comments

Cast your minds back to November and December. Insurance was the only market to be in. If you had a few quid in your pocket, you had to invest in a Bermudan start-up or buy some of the share options promisingly issued by some of the large Lloyd's managing agents, said the sages. Every week brought news of another company joining the market ready to take advantage of the rising rates.

But the New Year has brought everyone back down to earth. The real problems of finding cover for customers is causing huge headaches. And the ripples caused by 11 September have reached new shores.

While the multinationals have been wrangling with the prospect of massive rate rises and tough terms and conditions for weeks, if not months, local councils and businesses are just waking up to the new demands.

What seemed to be a problem for big business has now firmly become a small business issue. Councils, many of which start tendering for insurance services from 1 January, are facing large rate rises and will be passing on the costs through increased local taxes for businesses and residents. While these businesses are facing rate hikes for their own policies.

The biggest problem is terrorism cover. The government has agreed Pool Re will cover more than just fire and explosion claims arising from terrorist activities. That's great news. But as the Treasury gives with one hand it takes with another. It seems the minimum threshold for claiming from the fund will be raised from the current £100,000 per head.

The cautious approach indicates the Treasury is not quite convinced the market has explored all terrorism cover options. But this may be a harsh decision. While it is always difficult to know what the real situation is when brokers, insurers and reinsurers are negotiating cover, many are predicting the renewal season will not end until late February.

Undoubtedly some clients will take a chance and operate without cover for a few weeks, especially when reinsurers are charging the same for a month's temporary cover as they did for the whole of 2001.

While insurers and reinsurers have every right to seek a readjustment after offering such keen prices in the 1990s, it would only take one uncovered disaster to prompt accusations of uncaring greed.

And this would undo all the good done by the industry in picking up the World Trade Centre pieces.