AUGUSTA – Mainers should expect to see higher rates when they have to renew their business, home or car insurance. In some cases, there will be substantial increases, as insurers are reeling from tens of billions of dollars in claims resulting from the terrorist attacks nearly two months ago.

“Yes, we will be seeing increases in all lines in Maine,” said Deputy Insurance Superintendent Eric Cioppa. “I can’t tell you how much, or exactly when they will show up in bills, but there will be increases and in some cases significant increases.”

The major reason is the terrorist attacks and the resulting billions of dollars in losses insurance companies are paying out in claims in just about every category of insurance. In addition to actual losses, the insurers need to build up reserves to pay potential claims on future terrorist attacks. That means higher rates for everything from business interruption insurance to automobile coverage.

“That’s the way insurance works,” said Joe Edwards, former Maine insurance superintendent and an insurance consultant. “You spread the risk over as many people or businesses as possible, but in this case, we are in new territory.”

The problem is not just with the scale of the recent losses, but with the very nature of the risk. Hurricane Andrew, with nearly $20 billion in claims, was the biggest disaster in insurance history before the Sept. 11 terrorist attacks. The most conservative estimate of claims from the terrorist attacks is $30 billion, and some industry sources say the total could be three or four times that amount.

“The companies will seek to recover what they have to pay out, as well as to build up their reserves – and that will mean an increase in rates right across the board,” Cioppa said.

But unlike losses from a hurricane or other natural disaster, insurers have no history on which to predict how big a cash reserve will be needed to pay potential claims for future terrorist acts.

“The increases so far have been based on a guess, or reflect planned increases as a result of lower investment income,” Edwards said. “The stock market has affected investment income for months.”

Dick Albert, a Lewiston insurance agent who represents the Maine Association of Insurance Agents on the board of its national affiliate, said there have been increases in a number of policy areas already this year as a result of insurance companies making less in investments. He said he has seen increases of 15 to 30 percent.

“But when the increases as the result of the September attacks start to happen, I am hearing [they will be] in the 40 to 50 percent area,” he said.

Albert said there is concern rates could go even higher if Congress does not act to aid the industry. He said many insurance policies for companies rely on reinsurance to spread the risk. Reinsurance essentially is insurance policies that insurers buy from such companies as Lloyds of London to protect themselves from extraordinary losses. Many of those reinsurance firms already have sent out nonrenewal notices, according to Albert.

“I would say 60 to 70 percent of these policies are written on a calendar-year basis and these companies are protecting themselves in case Congress does not act,” he said.

Representatives of the insurance, construction and real estate industries, among others, are pushing Congress to authorize a temporary federal reinsurance program for the property losses that could result from future terrorist attacks. Some insurance companies have warned that policies will begin to exclude damages caused by acts of terrorism if such a federal program is not adopted.

Albert said if Congress does not act, businesses would be the first to see substantial increases. He said firms with large assets might have to buy several policies to cover their properties instead of buying a single policy.

“Without reinsurance, most [insurance] companies could not afford to take on the entire risk of say a $3 million building,” he said.

Peter Gore of the Maine State Chamber of Commerce said businesses already are looking at substantial increases in health insurance and Workers’ Compensation coverage. He said increases in insurance premiums, such as for property and liability coverage, could force some employers to consider shifting more of their health insurance costs to workers.

“This could be bad news for employees as well as for employers,” he said.

Edwards said there are several different proposals before Congress that would help reduce the risk insurers may face from claims that result from further terrorist attacks. One measure would provide low-interest loans to insurers; another proposal would establish a new federal tax on insurance policyholders, called a “special assessment,” to help pay for a fund to pay for future claims.

There also are several types of tax breaks being proposed to reduce rate increases that are needed to rebuild cash reserves depleted by current claims.

Dave Lackey, a spokesman for U.S. Sen. Olympia Snowe, said while there appears to be a consensus to adopt some legislation before the end of the year, no bill actually has been introduced in the Senate to deal with the issue.

“The senator is concerned about this,” he said. “She is waiting to see all of the various proposals developed so she can decide which is the best approach.”

The House Finance Services Committee has proposed a measure that would provide loans to the industry to cover 90 percent of terrorism-related costs over $1 billion. The measure would be in effect only one year to give Congress time to work out a long-term solution.

Any proposal faces votes in both the House and Senate and the approval of President Bush before it becomes law.