Many householders and businesses renewing their insurance policies in 2003 will find that they will not be covered for major terrorist attacks.
While a war invasion exclusion clause has always been included in policies, insurance companies have also now ruled out cover for more specific catastrophies on the scale of September 11th.
Irish insurance companies are covered by reinsurers who could be anywhere in the world and the home market is dictated by global events.
Mr Martin Long, spokesman for the Irish Insurance Federation, an umbrella organisation for insurance companies, said reinsurers had excluded acts of terrorism and so Irish companies had to follow.
Terrorism referred to major acts of terrorism, not, for instance, sectarian acts, attacks at a football match, etc.
"September 11th has changed the landscape. Reinsurers bore the costs of September 11th and the effects have trickled down to customers," he said.
The clauses in terms of all other damage, including malicious damage, damage to property, remained in place, he said.
"We're not trying to alarm people, we're just saying things have changed and this has affected the high street insurer," Mr Long stated.
Companies could not take unlimited liabilities on their books. It was an unfortunate by-product of September 11th.
Globally, the environment was more volatile with threats of major terrorist attacks, he said.
Five insurance companies in the State which between them cover 70 to 80 per cent of the market all have the exclusion clause.
The clause carried by a number of companies defines an act of terrorism as "an act, including but not limited to the use of force or violence or the threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or other purpose including the intention to influence any government or to put the public, or any section of the public, in fear".
Royal Sun & Alliance also excludes damage by ionising radions or contamination by radioactivity or the radioactive, toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component.
A spokesman said that the situation was brought about by its reinsurers. However, it was in negotiations with the reinsurers at the moment, seeking to remove the terrorism exclusion clause from household policies. He said it was hoping that householders would then be covered. It would apply only to ordinary household policies.
Hibernia also has the exclusion clause. A spokesman said the intention was to try to exclude cover for catastrophic events. "The worse case scenario would be a terrorist attack on Sellafield where people along the east coast of Ireland would perhaps have to be evacuated for years. Then they would not get cover," he said.
He said the exclusion applied to household and most commercial contracts as well.
A spokesman for Axa Insurance, which also has the exclusion clause, said that most Irish insurance companies bought reinsurance from London and whatever the London market excluded would have a knock-on effect in the State.
"It would have to be a major terrorist catastophe on the scale of September 11th. It basically boils down to what we could realistically recover from our reinsurer," he said.
At Allianz Ireland plc, a spokesman said that the exclusion clause applied to the company.
"There has always been the war exclusion but now there is the further distinction between war and terrorism.
"We've taken the stance because we as the insurer couldn't pay if such an event took place, so we would be insuring under false pretences," he said.
An Eagle Star spokesman said that the exclusion clause covered household, motor and commercial policies. He said that it had introduced the clause last year.