The CMSA is so concerned with legislative developments on the terrorism issue that the session was interrupted at intervals so that someone could announce the latest action in the U.S. Senate, where a measure that would create a federal terrorism reinsurance mechanism is up for debate.

Mr. Creamer said that if a bill does eventually pass, "you then have to convince reinsurers to come back in--there's no slam dunk on that."

He and other panelists were cautiously hopeful that some measure might win approval, but Mr. Creamer, who has been lobbying Congress on the issue, said there is "incredible misinformation in Washington. Most of the senators don't have clue."

Dawnmarie Black, a senior vice president with the Boston office of reinsurance intermediary Benfield Blanch, said that coverage is available with a $400 million limit. The biggest problem is capacity, which is tight for the New York City area, but less so for smaller commercial properties in smaller cities.

Currently, only 25 percent of commercial policies have rolled over, according to panel moderator Deborah H. McAneny, senior vice president with John Hancock Financial Services Inc. in Boston. She said that as more policies come up for renewal, New York will have more problems, noting that currently some lenders can only get $50-to-$100 million to insure their properties.

Ms. McAneny wondered, if congressional action frees up the market, whether insurers would give a price break "to people who bought at outrageous prices."

"I doubt that," responded Ms. Black.

Robyn Stern, regional director for structured finance at Ernst & Young in New York, noted the desire among some senators to thwart trial lawyer activity related to potential terrorism claims for negligence. These senators are supporting legislation to limit damage claims related to terrorism attacks, which, for example, might be brought against a landlord by those who had difficulty escaping a building after a bomb blast.

Fears that such claims could be crippling may be misplaced. Mr. Creamer noted that after the 1993 bombing of the World Trade Center, there were 283 liability lawsuits filed, and to date not one had been settled or successful.

Mr. Creamer said that his company has not defaulted any borrowers who failed to secure their properties with terrorism insurance, but had force-placed lots of them with insurers. His company is the servicer on World Trade Center bonds, and at the time of the attack "we had insurance certificates and binders, but no policy." The resulting ambiguity has resulted in legal action.

"Never close a loan unless you have the policy," he counseled, adding: "Get the policy and it will save you a lot of time in depositions." He also advised that insurers, when pushed, can generate policies faster than they let on "If you insist on it, you can have it," he said.

Tad Philipp, managing director at Moody's Investors Service in New York, said there was no avoiding a downgrade for real estate bonds when the properties involved had insufficient terrorism insurance. He mentioned that Moody's had highly rated a World Trade Center bond, commenting: "If they didn't have insurance, the bond would have defaulted."

CMSA is a New York trade group for commercial real estate finance capital markets. It counts 280 firms as members including commercial mortgage-backed securities originators, issuers investors and service providers, including insurers, and investment bankers.