The US now has its own Terrorism Act, but its speedy implementation has reportedly caught the industry flat-footed. The law was passed by the US Congress last week, and will be enacted into law by President George W Bush today (US time), with immediate effect. The insurers, who have been pushing for the law since the September 11 disaster, don’t appear to have counted on the hasty timetable.

From today all terrorism exclusion clauses are void and insurers have 90 days to develop premiums for terrorism coverage. They must in effect provide cover even before they have contacted their clients and informed them how much that will cost – if they know it.

Under the legislation, insurers are liable for 7%, 10% and 15% of their annual commercial property and casualty premiums before being eligible for federal assistance. Once the deductible is reached, the US Government will cover 90% of losses up to an annual program limit of $100 billion, leaving insurers with the remaining 10%.