The US Congress adjourned for the year yesterday without passing federal terrorism legislation.
With no federal cover in place, insurers and reinsurers are expected to exclude terrorism from cover on 2002 policies.
The Financial Times reported that US insurers faced chaos and their clients potential breaches of bank loan covenants.
The Congressional recess for the holidays comes as about 70% of all commercial insurance business comes up for renewal.
In the wake of the 11 September attacks the insurance industry has said that, without legislation from Washington, it will be forced to withdraw the vast majority of terrorism cover since it has no sense of how often and how expensive future attacks could be.
The FT said legislators would still probably pass a bill to provide for federal assistance on future terrorist insurance losses next year. Meanwhile, the industry was left having to ask individual state regulators' permission to withhold terrorist cover, it added.
