Tuesday's terrorist attacks on the World Trade Centre, Pentagon and airliners throughout the USA have dealt another devastating blow to the insurance and reinsurance industry.

At the time of the attack, the bosses of the world's reinsurance industry were gathered together in Monte Carlo to develop a strategy for global insurance. Instead of the usual meeting and greeting, they have retired to their rooms, glued to TV screens and wondering where the losses will stop, whether their plummeting share prices will recover, and whether their colleagues in the World Trade Centre, where Marsh, Aon, Guy Carpenter and The St Paul were based, will emerge unscathed.

Although the US government will pay for some of the claims arising from the devastation, the insurance industry will be facing unprecedented claims for physical damage, business interruption, and, no doubt, for psychological trauma. With all US airports closed (as we went to press) and buildings evacuated in many different countries, the claims will be huge, and the lawyers will have a field day.

Suffering businesses will, of course, call on their reinsurers. And right in the thick of it is Lloyd's.

Investors are selling insurance and reinsurance stocks as fast as they can. Claims will be massive, and premiums that are already shooting through the roof will escalate. Liability and business interruption will be near uninsurable. This comes on the back of a capacity crisis that has brokers looking at alternative risk transfer strategies like they've never looked at them before.

As for Lloyd's – who knows. Whenever there is a terrorist claim, Lloyd's is there to pick up the tab. Lloyd's only just escaped from the last batch of disasters. In what shape will it emerge from this one?