The murky area of terrorism cover is one that the 2003 RIMS conference has tried hard to address with its theme: "New World - New Risks - New Solutions."

Interest in terrorism insurance among small to medium sized US companies has increased sharply over the past two weeks, according to one Lloyds insurer.

Hiscox, which underwrites both foreign and domestic acts of terrorism in the United States, has seen enquiries increase five fold during the run up to and the start of war in Iraq.

However many US companies continue to find it difficult to get the right cover against acts of terrorism. A recent survey carried out by the Council of Insurance Agents and Brokers found fewer than 20 percent of medium-sized accounts had purchased terrorism cover offered.

The Terrorism Risk Insurance Act passed in the winter of 2002 continues to be controversial. Many experts say that this legislation is fairly flawed. "They came up with a very lukewarm solution." says Klaus Gebhardt, executive vice president of ACE Bermuda.

"The deductibles are so substantial that some providers will never get to the levels where it clicks in. They forced them to provide it, leaving them in limbo as to pricing. That's why it's seen as not successful" said Mr. Gebhardt. "It's also regarded as inadequate because it only offers cover for catastrophic acts of terrorism carried out by a foreign agency.

Stephen Ashwell, a Hiscox terrorism underwriter commented: "TRIA's limitations are significant and unfortunately many companies are not recognising this.

The fact is that US businesses are at risk from both foreign and domestic acts of terrorism, as demonstrated by the tragedy of the Oklahoma bombing."

Yet the demand for terrorism cover is still not unanimously accepted. Some exhibitors at RIMS such as the Hartford commented that the pick up rate of casualty terrorism cover has been lower than the pick up rate for property cover, others assert that it is increasing across the board.

Mr. Gebhardt said that ACE has found that very few companies outside cities are taking up cover. The highest take up rates have tended to be for landmark sites. Mr. Gebhardt said that ACE has found that very few companies outside cities are taking up terrorism cover with demand concentrated in landmark sites, while another Hiscox representative said that it is not confined to the main cities.

People are reluctant to pay for terrorism cover because they are so used to it being included for free in their policy, according to Mr. Gebhardt.

Some companies offer their customers a sweetener by throwing in free security advice. The information which they use for risk assessment is also useful to their clients in order to try and prevent attacks and hone their security measures.

Marsh Inc. has a whole division devoted helping clients "to prevent, prepare for, respond to and recover from all kinds of crises". They have even put together an e-learning facility the "Crisis Academy" which allows companies to assess their crisis readiness free of charge by enrolling on the Marsh website.

The chairman and chief executive of Marsh Crisis Consulting Ambassador Paul Bremer who was ambassador-at-large for counter terrorism under the Reagan administration spoke to delegates on Tuesday about risk management.

Throughout the week there have been different presentations on the two aspects of terrorism cover; "risk transfer" and "risk management". Risk transfer is the insurance and balance sheet protection part and risk management deals with getting the security procedures and practices in place that can help to prevent an attack.

As Justin Priestly, a director of AON's special risks/counter terrorism division, puts it: "No risk transfer in the world is going to save lives. the only thing that can do that is better security."

Previously in the British armed forces, Mr. Priestly served three tours in Northern Ireland as a bomb disposal expert.

Speaking at the AON booth, Mr. Priestly explained some of the ways that AON assesses terrorist risk. He said that AON has dabbled in counter terrorism risk management for many years, but now they have started to focus on the area.

"The problem with terrorists is that their modus operandi is constantly changing. You need to have a technical understanding of what terrorists are trying to achieve."

Asked for an example of what different types of terrorism goals there might be, he said:

"The IRA goals are totally different to Al Qaeda. The IRA didn't want civilian losses, they just wanted mass collateral damage which is why they set off a bomb in Bishopsgate outside of office hours. The only casualty was a freelance photographer. While with Al Qaeda their aim is obviously to injure personnel."

According to Klaus Gebhardt of ACE Bermuda, managing terrorism risk is mainly common sense. "It's not that complicated. In terms of assessing terrorist groups, you look at what their financial means are, what their modus operandi is, and you come up with a threat scenario. Then you look at the defenders, essentially the security which prevents attacks."

On one point, the industry seems fairly agreed: terrorism is not a new risk. Hiscox has been offering terrorism cover for 25 years. It's something that has always been around, but has only recently materialised.