"The information in this report isn't particularly flawed," said Joel Wood, senior vice president of government affairs for the Washington-based Council of Insurance Agents and Brokers. "The conclusions are."

Mr. Wood said while there are significant holes in the marketplace, at least there is a marketplace, and there are some signs of competitiveness that are still emerging, even though the Council is not completely happy with company response.

"We'd say the glass is at least half full; CFA thinks it is almost empty," Mr. Wood said.

Roger Kenney, associate vice president of research with the Downers Grove, Ill.-based Alliance of American Insurers, said he believes the program has been quite helpful in commercial lines and that insurance companies are providing coverage to policyholders.

There has been some resistance among policyholders to purchase coverage, Mr. Kenney said, not because they can't afford it, but because some policyholders believe they are not particularly exposed.

As for allegations that some risks have substantial surcharges, Mr. Kenney said it is necessary to look at the particulars of any given risk in order to make a judgment.

Julie Gackenbach, assistant vice president of government relations with the Des Plaines, Ill.-based National Association of Independent Insurers, added that the CFA report is more of a collection of quotes as opposed to an analysis of current market conditions.

She noted that under the legislation, insurance companies are required to charge adequate premiums. While rates cannot be excessive, Ms. Gackenbach added, they must be adequate.

Ms. Gackenbach noted that while CFA is calling for oversight hearings on the program, the process is already underway. The House Financial Services Committee, she said, has already requested a General Accounting Office study of the terrorism insurance marketplace.

Moreover, she said, the Committee specifically included oversight of the implementation of the program as part of its agenda.

In its report, the Washington-based CFA charged that insurers have undermined the law by "refusing" to significantly lower rates for businesses and facilities that are at risk of future attack.

Moreover, CFA said, insurers have offered few, if any, refunds to policyholders who had terrorism insurance in place when the legislation took effect and insurer projected losses dropped precipitously.

"Taxpayers are now picking up the tab for most terrorist losses, but insurers are still demanding excessive rates from their higher risk customers," said J. Robert Hunter, CFA's director of insurance.

"Many of the skyscrapers, building projects and public facilities that need terror coverage the most aren't buying it," he said.

He charged that insurance companies have engaged in a "bait and switch."

"First, insurers exaggerated problems with terrorism coverage in the marketplace in order to goad Congress into action," Mr. Hunter said. "Now that the law is on the books, insurers claim that it doesn't give them enough taxpayer largess to allow them to lower rates."

Mr. Hunter said that insurance brokers, risk managers and some state regulators have raised objections about "irrational rate setting."

Indeed, he charged, insurers appear to have adopted a deliberate strategy of over-pricing for higher risks to ensure that they do not buy terrorism coverage.

In addition, he said, while the law has no exemptions for certain types of terrorism, the Treasury Department has said that insurers do not have to cover nuclear, biological or chemical events if states permit exclusions.

Mr. Hunter said that CFA has called on Treasury to reverse its decision and urged state regulators to deny requests for exclusions.

Finally, Mr. Hunter said, CFA calculates that insurers should offer rate refunds of 40 percent to 50 percent to businesses that purchased coverage in the aftermath of the Sept. 11, 2001, terrorist attack.

But so far, he said, few, if any, refunds have been offered.

Mr. Wood charged that CFA is being highly contradictory.

"Throughout the debate, CFA claimed that the Act was a sop to insurers, a giveaway from the federal government," he said. "Now, they claim that insurers want to price it so high that consumers won't buy it."

"What would the marketplace look like if they had had their way on the legislation?" Mr. Wood asked. "It would be a disaster."