Mr. Zeman said that the NAII has "heard otherwise" from its member companies and had submitted commentary letters to the NAIC from large and small property-casualty insurers about problems with their reinsurance.

On the other hand, the NAII commended the NAIC for allowing regulators some leeway in evaluating on a case-by-case basis insurer requests for terrorism exclusions, Mr. Zeman stated.

He said that this is "absolutely appropriate" because any personal-lines company due to "its book of business, the location of its risk" or other factors, "coupled with lack of reinsurance," should be able to engage in "productive dialogue" with a state insurance regulator that could lead to an agreement on an exclusion.

One aspect of the NAIC's vote that the NAII would like to explore further is the purported statutory basis for the decision against the terrorism exclusion, Mr. Zeman indicated.

The motion passed unanimously by the NAIC indicated that such exclusions might violate state law.

In explaining what kind of laws might be implicated, NAIC president and Iowa insurance commissioner Terri Vaughan said that there are laws governing regulators' ability to disapprove policy language and laws requiring policy language to be clear and unambiguous, not misleading and not contrary to public policy.

Montana insurance commissioner John Morrison, chair of the NAIC's Legal Issues Ad Hoc Working Group, added that many states laws authorize the insurance regulator to disapprove language that is "unreasonable" or that "deceptively affects the risk" assumed in the general coverage.

"I don't think that a personal lines terrorism exclusion is deceptive or violative of public policy," Mr. Zeman stated.

Rita Nowak, vice president of the Alliance of American Insurers, based in Downers Grove, Ill., said that the Alliance was "extremely disappointed" by the NAIC's vote.

She explained that personal-lines insurers, like commercial-lines insurers, "need these exclusions to protect solvency --without them they are missing a very critical tool from an underwriting perspective."

The NAIC's "lack of affirmative action" on this issue "brings home the need for a federal backstop program," Ms. Nowak observed. Much of the difficulty over terrorism exclusions can be traced back to the failure of federal lawmakers to provide a program to guarantee coverage, she said.

Federal legislators, Ms. Nowak said, must become as well-versed in insurer solvency issues as state regulators.

Ms. Nowak said she is "not optimistic" about individual states' willingness to approve of the exclusion in personal-lines policies.

She observed that the NAIC's vote in December in favor of terrorism exclusions in commercial policies "acted as an incredible catalyst for affirmative action from the state regulators."

The lack of a similarly positive motion on the personal-lines exclusions means there is no catalyst for state acceptance of the exclusions, Ms. Nowak observed.

In fact, yesterday --less than 24 hours after the NAIC vote --Georgia insurance commissioner John Oxendine declared that to protect consumers he was denying a request by the Insurance Services Office to recognize terrorism as an excluded act in homeowners policies.

David Snyder, assistant general counsel for the American Insurance Association, headquartered in Washington, D.C., had a less pessimistic view of the NAIC vote.

He said that the NAIC had "sent a clear signal that, where circumstances warrant, exclusions will be considered [by individual regulators] and that seems to us to be a reasonable approach under the circumstances."

He explained that the evidence in front of the NAIC apparently did not indicate that the issues relating to terrorism exclusions were as clearly defined or as broad-based as they were for commercial lines.

As a result, Mr. Snyder continued, the action of the NAIC plenary committee was "a more nuanced and a more complicated action that matches a more complicated situation in personal lines."

Roger Schmelzer, regulatory affairs vice president of the National Association of Mutual Insurance Companies, based in Indianapolis, said, "The challenge currently faced by all insurers is a lack of experience in assessing future terrorism losses."

He also said that "these unquantifiable losses pose a serious risk to the solvency of personal lines insurers," and that terrorism exclusions "should be available to any insurers" concerned about the adverse affect that such risks could have on their policyholders.

With the lack of a federal backstop, Mr. Schmelzer said, "allowing reasonable exclusions for acts of terrorism is critically important for the continued health of the personal lines industry and for the millions of policyholders who depend on its products."