"We have come to the conclusion that terrorism, in itself, cannot be underwritten," said Arno Junke of Germany's GeneralCologne Re, one of dozens of senior insurance officials gathered in this German spa town to assess the impact.

The meeting included both insurance companies and reinsurers _ firms that sell coverage to the insurers themselves.

The suicide attack on the World Trade Center's twin towers brought an abrupt end to a period of lower premiums and easy coverage, when some insurers tossed in terrorism coverage without extra premiums or limits, company officials said.

Now the industry faces its largest loss in history, draining up to $75 billion from the roughly $210 billion in world insurance reserves.

In response, a group of six German insurers and reinsurers _ among them Munich Re, the world's biggest, and insurance giant Allianz _ will present the German government with a proposal to set up a fund to help insure against terrorism risk, Junke said.

Britain and Spain _ which have long faced losses from attacks by the Irish Republican Army and the Basque separatist group ETA _ already have similar systems in place. Britain's Pool Re, set up in 1993 by the government and insurers, covers damage beyond a fixed limit for private-sector insurance.

The German government, like its European counterparts, already is offering interim war and terrorism coverage for airlines, after insurers canceled war liability policies.

U.S. legislators are also drafting a proposal to create a so-called "homeland" fund, which would protect against extraordinary events like terrorist attacks.

"There needs to be an insurer of last resort," said Mark Burbridge of Britain's Euclidean Plc, which designs alternate forms of coverage.

In previous years, the annual meeting in the elegant resort of Baden-Baden provided insurers and the reinsurers who shoulder their risks with a tranquil setting to negotiate the following year's contracts.

This time, though, the industry is having to rethink long-standing insurance practices, such as terrorism coverage that was thrown in without extra premiums. If that continues, Junke said, "you will lose control of your exposure."

The Sept. 11 destruction in New York went far beyond industry worst-case scenarios. The most costly event before Sept. 11 was Hurricane Andrew in 1992, at nearly $20 billion.

If insurance companies can't get reinsurance, they'll begin narrowing their risks, said Donald Watson, an analyst with Standard & Poors in New York.

"Then you'll see things like sporting events that have to be canceled because they can't get insurance, and airlines that can't fly," Watson said.

Reinsurers in Baden-Baden made it clear to insurers they will have to raise premiums in areas unrelated to terrorism in an effort to replenish their reserves, although they didn't specify by how much.

"Everything is going up in multiples," said David Pease, director of London-based insurance brokerage PWS International.