The US Government has many things to consider if it is to provide "back stop" terrorism coverage said Ellen Seidman this week at the World Insurance Forum.

Ms Seidman is a senior counsel for the US Financial Services Committee and was formerly special assistant on economic policy to President Clinton. The Insurance Symposium, which is being held through today at the Southampton Princess, attracted about 400 insurance executives over the course of the week.

In a Wednesday lunchtime session, Ms Seidman spoke to the question of whether or not Government should step in as "insurer of last resort" following the withdrawal of reinsurers from writing terror cover following the events of September 11.

After September 11 there was a push - both from insurers and other economic sectors - on the US Government to enact legislation to avert the economic fall-out from lack of terror cover. Nonetheless, the US Government did not however, as sought, put legislation in place ahead of the January 1 insurance renewal period.

Meanwhile some sectors - particularly construction - have reported the inability to buy terror cover as having a negative affect on financing options.

Business Insurance magazine last week reported the situation as a "slowly developing crisis" with at least one executive from one of the country's largest commercial real estate lenders saying the company - GMAC Commercial Holding Corp. - has walked away from several large projects because of the lack of terror cover.

In advance of US Congress reconvening Ms Seidman said: "If the hearings reveal significant actual or potential dislocation, the possibility of legislation, even in a short session with significant distractions (due to elections), becomes more real."

But Ms Seidman also pointed to the vast considerations that should be taken in to account if or when legislation is enacted. Ms Seidman said there are questions on how the Federal Government would "properly" price terrorist cover, and what form it would take. And she questioned what affect a federal insurance scheme would have on the private insurance sector.

Ms Seidman also questioned whether or not the US Government would enact terror insurance legislation at all.

Clarifying that she was speaking her own thoughts and not on behalf of those she works for, Ms Seidman said: "There is the option of doing nothing, which many in Washington believe is the most likely outcome.

"The lack of horror stories, the signs of economic recovery, the distractions of Enron, the short congressional session because 2002 is an election year, and the feeling that the war on terrorism is reducing the likelihood of another event are all factors playing into this opinion."