Specter of Terrorism Driving Insurance Costs Up

Small commercial insurance companies are pulling out of the New York market - or at least parts of it - because they claim they could not afford the losses in the event of another terrorist attack.

Thus, business owners are being forced to purchase costlier insurance from larger insurance carriers.

A spokesman for Utica National Insurance Group, Michael Austin, said the firm will no longer underwrite businesses within a quarter of a mile of a terrorist target. In New York City alone, Utica has "$4 billion subject to loss" in the event of an attack, Mr. Austin said.

The company is not conducting risk assessment in the city, he said. Real Estate Representation, a commercial tenant at 12 E. 41st St., received a nonrenewal notice from Utica this year.

"They deem the New York Public Library to be a terrorist target," the president of the association, Marisa Manley, said. "We are affected by that."

According to an independent insurance agent specializing in commercial insurance accounts, Sharon Emek, some insurance companies cannot afford the increased deductible under the Terrorism Risk Insurance Extension Act. The law, renewed at the end of last year, provides insurance companies with federal subsidies.

Since September 11, 2001, Ms. Emek, a partner in CBS Coverage Group, said she has had to move her clients' insurance policies to larger insurance companies. Since the extension act renewal, she said she has had to move an additional 5%.