The Insurance Council of Australia (ICA) has dampened the hopes of the biotechnology industry with the revelation that it believes "the unforeseen risks of genetically modified foods may be too high for insurers".

The refusal to offer cover against any litigation from consumers will leave GM farmers, and biotechnology and food companies liable for potentially large claims damages themselves. Such claims could involve consumers claiming allergic reactions to GM foods, the cross-contamination of organic crops and the development of mutant weeds, resistant to conventional herbicides.

Insurers are concerned that the new and complex technology used by GM companies is potentially creating a situation where the true extent of damages claims will only be known in the future. For years after the Wittenoom asbestos disaster, for example, mining companies were still being sued for millions of dollars by workers who had contracted cancer as a result of being exposed to the deadly mineral.

According to a report in the Herald and Weekly Times two of Australia's biggest farm insurers, CGU and Elders, have recently reiterated their reluctance to deal with GM cover. Chris Jackson, spokesman for CGU, said: "GM technology is still in its infancy and research on any direct or indirect impacts is far from conclusive. [Cover for a GM crop will be] assessed on its merits."

Elders national insurance manager Kim Perrin meanwhile told the paper that farmers should not assume that their normal liability policies automatically cover them for any GM activity.

The Australian Gene Technology Regulator has meanwhile rebuffed the insurers fears. A spokeswoman stressed that the gene technology legislation in Australia is the most stringent in the world, and the risks associated with GM are exceedingly low.