Life and health insurers are not sure how well they can exclude coverage for terrorist attacks involving nuclear bombs, biological weapons, chemical weapons or radiological materials.

Officials at the U.S. Government Accountability Office have published that finding in a report on the insurability of NBCR terrorism.

“Measuring and predicting NBCR risks present distinct challenges to insurers because the characteristics of the risks largely diverge from commonly accepted principles used in determining insurability.,” GAO officials write in the report.

Moreover, representatives from the American Council of Life Insurers, Washington, and life insurance company executives “told us they believed that most states do not allow for terrorism or NBCR exclusions in life insurance policies,” GAO officials write in the report. “In 2 of the states specifically included in our review — New York and California — state insurance law and implementing regulatory policy prohibited both individual and group life insurance policies from excluding NBCR or other terrorism events.”

The GAO officials note that group life insurers are excluded from TRIA.

“Representatives of 2 group life insurers we interviewed said that their companies either had not found reinsurance for NBCR risks or the costs were very high relative to the amount of insurance that could be purchased,” the GAO officials write.

The GAO officials make no recommendations in the report.

Two House Financial Services Committee subcommittees plan to meet Wednesday to hold a hearing on “Protecting Americans from Catastrophic Terrorism Risk.”

Congress voted in December 2005 to extend a scaled-down version of the original Terrorism Risk Insurance Act reinsurance program for 2 years. The extension is set to expire Dec. 31, 2007.

In the past, Bush administration officials and top members of the Senate Banking Committee have opposed expanding the TRIA program to include group life insurers as well as property-casualty insurers.

Members of the President’s Working Group on Financial Markets appear to be close to completing a report of their own that will conclude that the private insurance and reinsurance markets should take over for the TRIA program when the current extension expires.

GAO officials argue in the NBCR report that NBCR risks are different from the risks that private insurers and reinsurers usually cover.

NBCR risks are different because of the potential for catastrophic losses, the lack of knowledge pertaining to the long-term consequences of an NCBR attack, and a lack of historical experience with these types of catastrophic attacks on the United States, GAO officials write in the report.