AUGUSTA – If terrorists were to strike Maine today, nearly all residents and businesses would have their losses covered by insurance. But that will change over the next several months. Insurers will be allowed to exclude acts of terrorism from their insurance policies in Maine, Insurance Superintendent Alessandro Iuppa said Wednesday.

“I had to weigh the pros and cons,” he said, “and I decided it was best to try and preserve a market in the state. If the exclusions were not granted, some carriers, I believe, would have pulled out of the state because they could not get reinsurance after [Jan. 1].”

Most insurance companies rely on reinsurance to spread their risk. Reinsurance essentially is insurance that insurers buy from such companies as Lloyd’s of London to protect themselves from extraordinary losses. Because of the huge losses from the terrorist attacks in September, however, nearly all reinsurance companies on Jan. 1, 2002, stopped writing coverage that included losses from terrorist activities.

Under state law, insurers must get Iuppa’s approval to change the terms of policies they issue in Maine. While insurance companies are regulated by the states, the reinsurance market is not regulated. Most other state regulators around the country also are granting exclusions.

The terrorist exclusions were granted to a wide variety of companies writing policies in Maine ranging from automobile to life insurance.

If a plane blew up because of a terrorist attack and a part fell on someone’s house or car, for instance, the damage no longer would be covered by that person’s homeowners or auto insurance. If someone died in a plane crash because of terrorism, that person’s family could not collect on a life insurance policy.

“People will start to be affected as their policies are renewed or they buy a new policy,” Iuppa said. “And although my ruling allows for this change, some companies may decide to continue to offer coverage that does include losses from a terrorist attack.”

OneBeacon Insurance, the largest personal and commercial insurance carrier in Maine, lost its reinsurance for policies that included terrorist coverage on Tuesday. Anthony Payne, OneBeacon’s regional vice president for marketing in South Portland, said about 5 percent of its business customers have received nonrenewal notices.

“We assessed each client,” he said, “and those that we thought had a higher risk, we sent notices as a precaution. For most business customers, we continued coverage because we determined we are at low risk with them.”

But, without reinsurance Payne said, OneBeacon is carrying all of the risk. That means higher premiums are likely for all policies whether they have terrorist coverage or not. He said even though he agrees a terrorist attack on a site in Maine is unlikely, it still is possible they will have to pay claims on policies that do have terrorist coverage.

“We all remember the once-in-a-century ice storm,” he said.

Consumer groups had opposed the granting of exclusions when they were first requested in November. John Dieffenbaker-Krall, co-director of the Maine People’s Alliance, said that Mainers need and deserve the protection from acts of terror that they have had provided for them by insurance all along. He said people have been paying premiums for protection of their homes, cars or pickup trucks for years and should not lose that protection.

“I suspect that as people get their renewal notices, we will get some comments,” Iuppa said. “We will explain why we did what we did.”

Iuppa said he endorses the call by the National Association of Insurance Commissioners to establish a federal reinsurance program and he wishes Congress had been able to act on such a program last month. He said such a federal program would stabilize the market and help keep rates from increasing dramatically.

“With the inaction of Congress, state regulators have been placed in the unfortunate position of having to approve some exclusions in order to protect the solvency of companies in the commercial lines market,” said Iowa Insurance Superintendent Terri Vaughan, president of the NAIC. “We urge Congress to act on this issue immediately upon their return.”

In December, the House passed a measure that would provide loans to the industry to cover 90 percent of terrorism-related costs over $1 billion. For attacks causing more than $20 billion in claims, the proposal would assess a fee on all policyholders to help pay for those costs. The measure would be in effect only one year to give Congress time to work out a long-term solution.

In the Senate, there has been discussion, but no action. The Senate committee looking at the issue is reviewing a measure that would require the insurance industry to pay for $10 billion in claims before the federal government would provide any assistance. The taxpayers then would be responsible for 90 percent of the losses over the $10 billion threshold.

“This will be very much on the front burner when we get back,” said Rep. John Baldacci, D-Maine. “We just ran out of time to resolve this last month.”

Baldacci said he opposed the House passed measure because it put too much risk on the taxpayers and not enough on the insurance companies. But he said he supports the concept of the legislation. Other members of Maine’s congressional delegation also have supported the concept of a federal reinsurance program, but want to see the final language of any plan that may be worked out between the House and Senate before endorsing any specific measure.

Congress does not return to Washington until Jan. 23.