Reuters news agency reported this week a US Treasury Department official said she was hopeful the Senate will act on legislation to keep down price hikes in terror risk insurance in the wake of the September 11 attacks.

"We are hopeful that the Senate will soon act and that the various approaches being discussed will be melded into a single consensus package in conference," said Sheila Bair, Treasury assistant secretary for financial institutions, in remarks prepared for delivery in New York.

Many carriers have said they will either sharply raise premiums or stop offering terror risk insurance altogether after this year's terrorist attacks, which has left the industry with claims, according to recent estimates, of up to $70 billion. In turn, lack of access to affordable insurance could make financing new construction projects more difficult.

"This must get done quickly. The majority of insurance contracts expire at year-end and renewal notices for next year are being prepared and sent to policyholders. Every day counts," Ms Bair said.

The House recently approved legislation dealing with the issue but legislation has foundered in the Senate over the question of curbs for damages awarded in lawsuits. Ms Bair said a "necessary condition" for administration support of a bill would be procedures for consolidating and managing mass litigation arising from a terror incident.

Speaking with The Royal Gazette this week, Julie Rochman, spokesperson of the American Insurance Association (AIA), said there is a pressing need for the US Government to move forward as politicians will soon "be going home".

The AIA, a Washington D.C. organisation, lobbies the US Government on behalf of its more than 400 members - including several Bermuda-based insurers - from the property and casualty insurance industry.

The industry is lobbying for what would amount to the Government stepping in as an "insurer of last resort," when it comes to terrorism. But, so far, Ms Rochman said the US Government has only approved a loan scheme in the event of further attacks.

Ms Rochman said the bill passed by the House last week would see insurers pay terrorism claims up to $1 billion. Government loans would be available to help insurers pay property and casualty claims from any future attacks that exceeded that amount.

Ms Rochman said the industry is asking the US government, following the September 11 terrorist attacks, to provide not loans, but a "back stop" for the insurance industry, going forward.

A "back stop" would see the Government pick up costs, beyond a pre-determined level, were there to be future acts of terrorism.

Ms Rochman said local insurance giants - ACE and XL - have been very active in Washington D.C., attending a meeting with George Bush on September 21, as well as other meetings "in town," she said.

Ms Rochman told The Royal Gazette in October, that with the complexity of the issue this is something that would normally take eight to 12 years to get passed through Government. But, she said the issue must be resolved on a short time line - before the end of the year - when a large percentage of insurance policies become renewable.

With files from Reuters