A new report from analysts Conning and Company says U.S. property and casualty insurers will begin pricing “terrorist attack risk” separate from other coverage in light of the September 11 terrorist attacks. The report also suggests that maximum probable loss in claims will be refigured to a higher level and priced accordingly. As well, Conning notes the “inevitable increase in losses is escalating premiums in virtually all commercial insurance lines”. In its third-quarter analysis and forecast for the p&c industry, Conning predicts that terrorism exclusions will become common and that this will assist the assessment of losses and proper pricing of terrorism risks. “This is very similar to how earthquake insurance is separately underwritten and priced, and often separately reinsured,” says the report’s author, Conning vice president Clint Harris. “The principal differences are that more is known about where earthquakes are likely to occur and how to control the damage.” The recalculation of maximum probably loss will likely result in higher rates and lower net retention of risk for specific exposures, the report goes on to say. As probable loss estimates rise, insurers and reinsurers will seek more reinsurance or retrocessional coverage for risks. The commercial market, which was already seeing hardening in the U.S., will see faster rate increases and diminished capacity as a result of the September 11 attacks. Catastrophe insurance and loss triggers in the commercial market will also undergo reconsideration, the Conning report suggests.