Mr. Derella, the president of The Kingstar, a wholesale agency in Kingston, N.Y., said he based his comments on the feedback from the more than 350 retail agents he deals with throughout the state.

He made his comments in follow-up to testimony given to the New York State Insurance Department. Mr. Derella said the factors behind the hardening insurance market, coupled with the fall-out from the terrorist attack of 9/11, have created a " ?perfect storm' scenario, with the rapid deterioration of market conditions," throughout the state.

The testimony came last week at a hearing held by the department on the condition of the state's insurance market.

Mr. Derella told department officials that "availability and affordability do not impact equally all businesses or all areas of the state," and "some industries are more adversely impacted than others." He added that agents with multistate accounts tell him that the market conditions are worse in New York than elsewhere.

"Insurers throughout the state are actively re-underwriting their exposure," Mr. Derella said. "However, reports from our members indicate that availability problems are most severe in New York City."

While much focus is being placed on large commercial property risks, small commercial accounts are finding it difficult and sometimes impossible to find coverage.

Many insurance companies are leaving lines of business, or if they are writing, are writing as non-admitted, dramatically escalating rates and putting terrorism exclusions into the policies, he said. Carriers are not writing large property risk or excess property directly. Coverage of $50 to $100 million in liability is not being written without terrorism exclusions on non-admitted paper, he added.

Statewide, Mr. Derella pointed out problems that have plagued New York in the past, particularly concerning coverage for commercial contractor liability, have become even more acute. Where coverage is available, rates have risen between 30 and 1,000 percent, he said.

He pointed to one contractor who last year paid $8,000 for insurance and the same coverage this year cost $33,000. He said reforms of regulation over contractor liability are urgently needed.

The state's market situation underscores the need for a federal backstop for reinsurance related to terrorism, said Mr. Derella, whose comments were echoed by the Independent Insurance Agents of New York of Syracuse, who gave testimony on a related subject to the department back in December.

To be free of rate and form oversight, insurers have gone to the more expensive non-admitted paper. Once the issue of reinsurance is taken out of the mix, Mr. Derella suggested, insurers could then concentrate on hard market issues, making price increases more manageable.