Insurance and business groups are again pushing to get guaranteed government indemnity for terrorist attacks, reports the New York Times. They argue that terrorism is so freaky it can’t be included in traditional insurance business models.

This is the second go-round on this issue. The insurers won last time by getting the guarantees enacted right after 9/11 extended to give them coverage up to $100 billion. Of course, they’re in mortal fear of the multi-billion hit that the companies covering the World Trade Center took when the towers collapsed.

The resonates in Las Vegas so long as major resorts think they could be potential targets. If megaresorts cost $3 to $7 billion to build, they’re going to be hard to insure and Sen. Harry Reid pushed for the government insurance last time. Still, insurers say the main targets are New York, Chicago and Los Angeles. 

The big question is whether the requirement for terrorism insurance is stifling development. With the government program, development has flourished. Would it continue if insurance companies had to get terrorism insurance? Insurers are scared that they cannot model the losses. Hmmm. They seems to be able to model near every other kind of disaster.

Would it be beyond human ingenuity to get secondary coverage on top of “ordinary” insurance. After all, isn’t insurance the idea that everyone pays a little to cover the big hit?  And the paper’s report shows the market is already beginning to function in antcipation of the end of the program in 2007.