Do the higher price of insurance and difficulties in obtaining it hurt a national economy? While no one in Australia has yet measured the effects, US legislators are accumulating evidence that some sectors of the economy, at least, are being hurt.

A study released last week by the General Accounting Office said some sectors of the US economy, particularly commercial lending and real estate, are beginning to experience difficulties because they are unable to find sufficient terrorism coverage at any price.

The report, which was prepared for a congressional financial services committee, said the January 1 renewals have revealed that many insurers cancelled terrorism risks or raised prices in a way that could cause “economic drag that could slow economic recovery and growth”.

Now the fear is that the mid-year renewals will be even worse. This is prompting the legislators in Washington DC to return to the controversial issue of government support for terrorism cover. Attempts late last year to introduce such cover eventually failed to find their way through the legislative minefield in Washington. Lobbyists are continuing to demand government action. Further reports on the economic impacts of the insurance stalemate are likely in the next few months.