Standard & Poor says the insurance system will be able to absorb up to £35bn in losses from the terrorist attacks on the World Trade Centre.

Insurable losses of over £6bn - £10bn will dent individual insurers' balance sheets, it said.

It emerged that only one of the World Trade Centre's towers was insured, because the possibility of a double accident was thought too improbable.

Steve Dreyer, managing director for US insurance industry ratings at S&P;, said: "While we cannot yet endorse a specific estimate, companies so far have acknowledged around £2.7bn in losses, a figure which will likely go much higher.

"Once insurable losses exceed £6bn or £10bn, we would expect to see a significant impact on balance sheets of individual insurers. However, the totals would have to exceed £35bn before we would begin to worry about the insurance system."

Analysts point out that the insurance system is heavily capitalised and can sustain significant damage without threatening the overall stability of the system.

By comparison, Hurricane Andrew cost the industry approximately £13.6bn and the 1993 World Trade Centre bombing cost under £680m.