Sales of travel insurance are falling following the US terrorist attacks.

Columbus Direct confirmed its sales had fallen by 7%. Others in the market are experiencing similar dips in sales, say analysts.

The industry is being hit by falling numbers of holiday bookings. The World Travel and Tourism Council says there has been a 30% decrease in worldwide demand for travel and tourism since the US attacks.

The council predicts the decrease in demand for travel and tourism could be up to 10% in the UK over the next 12 months, with the loss of 190,000 jobs.

A Columbus Direct spokesman said: “Rates are going up and sales have dropped because people are not travelling. We've had to shelve plans to expand the company.”

Managing director of Inter Group Insurance Services Andrew Blowers said: “There will be a vast increase in rates, as reinsurance rates are rising.”

No travel insurers have announced plans to shed staff as yet, but a spokesman for Club Direct said there could be job losses if travel insurers see their business affected in the long term. Several tour operators have announced plans to shed staff, including Airtours, Britain's biggest package holiday company.