Early predictions were yesterday that the series of deadly bomb attacks on London's transport system would not leave the insurance industry flooded with costly claims.

Details were sketchy on how Bermuda's reinsurance and insurance players active in the London market would fare individually as companies said it was too soon to assess the financial impact of yesterday's morning terrorist attack. At least one Bermuda-based reinsurer said it had trimmed underwriting in certain areas because of concerns that London and Europe could continue to be a target of militants.

More than a dozen Bermuda-based companies, including non-insurance ventures like Butterfield bank and the Island's two largest law firms, have London operations employing a combined total of well over 1,000 staff. All the Bermuda international companies with London offices successfully contacted by The Royal Gazette reported that employees were largely accounted for and safe (see separate story).There was also no structural damage reported at any of the Bermuda companies' London operations.

By later in the day, management at these firms were already turning an eye to what the tragedy would cost economically.

An OECD report released on Wednesday warned that insurers are not equipped to bear the full cost of terrorist attacks which it said could cost from $50 billion up to $250 billion per attack. It urged OECD nations to set up or continue public-private partnerships to stabilise terrorism insurance markets faced with large-scale, or frequent, attacks.

The insurance industry paid billions in claims after the September 11 terrorist attacks on New York in 2001. Preliminary forecasts yesterday were that the cost for the London attack would be moderate in comparison. Industry watchers said property and casualty insurers ? as most Bermuda-based insurers are ? were unlikely to see significant claims because the UK government's Pool Reinsurance Co. Ltd., a scheme established in 1993, could bear much of the price tag.

"London has regrettably had to deal with these types of issues for over 20 years. We believe that the property damage is contained within Pool Re," AXIS Capital chief executive John Charman said.

Pool Re coverage, if it is triggered in this event, would apply to commercial property damage and business interruption.

Under the Pool Re programme participating insurers pay according to market share, with the maximum amount any one insurer pays capped.

Mr. Charman, a veteran of the Lloyd's of London market, said AXIS was not a member of Pool Re. Several other companies contacted by The Royal Gazette including ACE and XL said it was too early to speak to how the event could impact them or the industry in general.

Lehman financial analyst Jay Gelb, who follows a number of Bermuda P&C insurers said in an investor note that ACE Limited, Arch Capital, Everest Re, Partner Re, RenaissanceRe Holdings Ltd. and XL Capital, all could be exposed to losses from terrorist attacks in the U.K. and elsewhere.

One source close to the Bermuda insurance industry said that the Island's reinsurers and insurers was already fielding calls from analysts and ratings agencies yesterday as they began to track what impact the attack could have on bottom lines.

Early cost estimates were drawn between yesterday's attack and the 2004 Madrid, Spain terrorist bombing as both hit metropolitan and public transportation systems. Investment management firm Merrill Lynch put the Madrid attack at an insured loss of 93 million euros ($111 million in today's dollars). IPC Re chief executive Jim Bryce said the industry impact would become clearer once it was known what insurance, possibly self-insurance, the London transit operators had in place.

"This has brought London to a halt. There has been great economic loss," he said of the attack that killed and injured.

Mr. Bryce said a large chunk of the economic loss borne by London firms would not be covered by insurance as business interruption policies can only be claimed against if a company's premises were damaged in the attack. Mr. Bryce said the Madrid bombing had not been a major event for the insurance industry, and he would expect the same to be true for yesterday's attacks on London. Mr. Charman said he has been concerned about the possibility of more European attacks since the Madrid bombing. "I have been urging vigilance over terrorist activity in Europe since the awful Madrid bombing. Indeed we withdrew from the London Transport policy as well as several other like risks. We have been very sensitive to the possibility for co-ordinated attacks and heavily considered this in our underwriting. "The market has been consistently underpricing this risk for the last couple of years as well as fundamentally misunderstanding the potential for serious loss," he said.

A note from analyst Merrill Lynch David Rosenberg said the general economy impact of the London attack was not predicted to be lasting, or serious. "Using the after-effects of the March 11, 2004 Madrid, Spain terrorist bombing as a template, the market impact from yesterday's London bombing will likely prove brief and the macro impact basically non-existent. "However, we recognise there are notable differences between the Madrid attack and this one, in particular, London is a major financial centre and a group calling itself the Al-Qaeda Organisation in Europe has claimed responsibility for the attack and is now making threats against other countries," Mr. Rosenberg said.The attacks could focus US legislators' attention on what public-private partnership, if any, should be built with the nation's insurers as the existing multi-year legislation nears its end of 2005 expiration date.

A recently released US Treasury report said the Terrorism Risk Insurance Act, which was put in place after the 9/11 attacks, should not be extended in its present form but did leave the door open for the possibility of some kind of Government reinsurance 'backstop' for the insurance sector if faced with another terrorist attack on US soil.

Claire Wilkinson, vice-president, global issues for New York-based Insurance Information Institute told The Royal Gazette: "Public-private partnerships are the preferred approach adopted by many countries. Several European nations have some kind of federal programme to insure and reinsure terrorism risk. "The attacks really underline that this is not an insurance issue. It is a national, economic, homeland security issue. A federal role is key to ensuring that terrorism risk insurance remains available."

In addition to the mutual insurance Pool Re scheme in the UK, and the temporary US TRIA programme, public-private partnerships are established in Australia, France, Germany, the Netherlands and Spain.