CHICAGO — A panel of insurance industry experts Tuesday suggested that the insurance industry is not in a position to fully insure terrorism risks and that the absence of a federal terrorism insurance backstop would hurt business and the economy.

“I don't think we're ready to not have a backstop,” said Richard Rabs, vice president, insurance and risk, for Veolia Environnement North America in Chicago. But, said Mr. Rabs, “The current mood in Congress is that they don't want to help out big business or (provide) an insurance industry handout.”

Mr. Rabs made his remarks as part of a panel at this year's 23rd Annual Insurance Executive Forum presented by the Katie School of Insurance and Financial Services of Illinois State University. The panel discussed the likelihood of an extension of the Terrorism Risk Insurance Program Reauthorization Act of 2007 on its expiration at the end of 2014 and other issues facing the insurance industry and insurance buyers.

“I look at terrorism and say it's not what it costs us to have (a federal backstop) it's what's it going to cost us not to have it,” Mr. Rabs said. “You could put companies out of business without it and I'm not sure the insurance industry is ready to take that risk.”

Another panelist, A. Morris Tooker, executive vice president at General Reinsurance Corp. in Stamford, Conn., said the limited information available to insurers about terrorism activity and government efforts to thwart terrorism makes it a difficult exposure to underwrite.

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“From a risk-taker's perspective … part of the real game here is you only know 5%, 10% of what's going on and the rest of it is buried in some file in New York or D.C.,” Mr. Tooker said. “I don't know how you even underwrite it.”

While the insurance industry might have capacity to cover a terrorist act involving a conventional weapon, “You get to these really scary tail events — fire following nuclear — there's no way,” he said.

Kelley Kinsella, senior vice president and regional executive officer for ACE USA's Midwest Region in Chicago, said she thinks a backstop is needed because “if something happens it's an industry-wide event. It's not just a one company event.”

But Howard L. Rosen, senior director of financial services ratings at Standard & Poor's Corp. in New York said that as a citizen, he asks, “Where is the money coming from?”

“What bothers me as a citizen is the lack of planning and preparedness that our government does or doesn't do to fund these programs,” Mr. Rosen said.

Though he thinks winning passage of a TRIPRA extension will be difficult, Mr. Tooker said he thinks it's doable. “I think if the industry speaks with one voice it will get done,” he said. “But I think if part of the industry says there's enough capacity I think we're dead in the water.”

The panel also discussed recent natural catastrophes that have interrupted supply chains and raised the issue of what Mr. Rosen called “risk contagion” and risk concentration.

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“I think for our customers, it's put so much pressure on them to provide data,” said Michael C. Liss, national partner, Midwest region, at Willis North America in Chicago. In approaching insurers, those clients have to be able to demonstrate that they have alternatives in place should they face a catastrophe that disrupts supply chains, Mr. Liss said.

This year's Katie Forum took place at the Union League Club of Chicago and was moderated by Millie Workman, director of training and education at the International Risk Management Institute Inc. in Dallas.