If the current program is not renewed, “demand for private market terrorism insurance protection will inevitably increase and premium rates will significantly rise.”

“The private market is unlikely to duplicate the coverage limits available under the current program if renewal is unsuccessful,” Fitch says.

The report was issued as Congress prepares to leave town for a summer recess. Work does not resume until September 9, and they are likely to spend most of their time debating farm legislation, repeal of the healthcare law, budget issues and raising the debt ceiling.

The current legislation, the Terrorist Risk Insurance Program Reauthorization Act (TRIPRA), doesn't expire until December 31, 2014, but renewals of existing policies will begin in January, creating great uncertainty in the market.

There are currently no plans for congressional hearings on the program, which would have the effect of raising public awareness of the coming crisis.

As for workers' comp, the report says the coverage is statutorily required in almost every U.S. jurisdiction and exclusions and limitations of coverage in this product line are generally prohibited.

Primary underwriters of workers' comp are not allowed to exclude specific perils, including terrorism from policies.

“Since the events of Sept. 11, insurers have made a concerted effort to measure the exposure to man-made catastrophes in workers' compensation portfolios using more refined address and employee location data needed for catastrophe modeling,” the report said.

As a result, insurers are better able to manage or reduce this concentration risk where possible.

“Workers' compensation insurers could be particularly vulnerable to large losses if an extreme terrorist event takes place without TRIPRA coverage,” the report said. “Recognition of this vulnerability may lead to a withdrawal of insurer's underwriting capacity from the workers' compensation market, particularly in industries and geographic areas with greater perceived risk of terrorism-related losses.”

In June, the Treasury Department asked for public comment on the long-term availability and affordability of terrorism risk insurance.

The new request for data was sought on behalf of the President's Working Group on Financial Markets.

Comments are due by Sept. 16. The Working Group is composed of the top members of most of the federal financial services regulatory agencies.