Ghost town: Martin Place in the days after the siege. Under legislation passed following the September 11 attacks in America, the federal Treasurer can declare certain events to be acts of terrorism for insurance purposes. In those circumstances a federally funded body, the Australian Reinsurance Pool Corporation, can step in to assess the likely loss from the incident and, where necessary, reduce the scope of claim liability for insurers. The aim of the arrangement is to shield insurers from catastrophic losses and thus ensure they continue to offer the products. A statement from the corporation in mid-December said the incident was "being investigated by the relevant authorities". It has requested insurers to inform the corporation of claims notified and estimates of the likely losses.

The Sydney siege brought businesses in Martin Place to a standstill. It is understood the government is inclined to declare the event an act of terrorism under the relevant act but a spokeswoman for Treasurer Joe Hockey declined to make any comment on that likelihood, citing an ongoing process. "We have been talking with insurers and are monitoring the situation closely. We are not aware of any insurers refusing to pay claims," she said. "We are also working closely with relevant agencies as they carry out their investigations. If required, any decision on declaring a terrorism incident would likely be made in the coming weeks." If any affected businesses had concerns about the status of their claims, they should contact the Treasury, she said.

"The government will do all it can to ensure affected people in the area can get on with business and are no worse off," she said. The siege occurred at a time when consumer sentiment fell to its lowest level in more than three years, with many retailers under pressure to step up the frequency and depth of sales. The Australian National Retailers forecast consumers would spend $8.3 billion the week of the siege. Russell Zimmerman, executive director of the Australian Retailers Association, said sales had "slowed right off", and that it had affected sales across Australia. A spokesman from IAG Commercial Insurance, which operates under brands including CGU, Lumley and WFI, said most insurance policies sold to small businesses contained optional business disruption clauses and the siege had prompted claims. "In this case, the claims received to date have been relatively low in value and the classification will not change IAG's treatment of claims which are being paid in full," he said.

An Australian Retails Association spokesman said retailers were primarily concerned with their safety, and that of their staff. "It happened a week before Christmas, so they might not even have had a chance to do anything yet (about their claims)," he said. Among those affected were businesses in the Queen Victoria Building precinct. "We weren't forced to shutdown, we were open but minus the customers," said Sanjay Singh, manager of store Pen-Ultimate. "We lost almost a week's business, roughly $25,000 to $35,000, given the Christmas period is one our busiest."

He said people were scared about the safety of their loved ones, and not in the mood for present-buying. "Luckily, after everything was normalised and people started thinking it was not a terror attack but just a crazy man, they started to come back. That loss might have been recuperated the next week," he said. He said he had not put in an insurance claim yet. Kalmar Antiques owner and manager Damien Kalmar said he thought his business had lost money, but had no plans to actually put in a claim at present. "The numbers were definitely lower than they were on the previous Monday. Coming into Christmas, I'd say we lost around the $7,500 mark," he said.

"We could actually [put in an insurance claim]. But because we're a bit more of a niche market, sales could be up one day and down the next." Baroque Jewellery manager Lily Lee said she did not have plans to put in an insurance claim, despite the fact that her business "didn't have any customers for three or four days." "I'd say we lost $4000 to $5000." Cicchetti Wine Bar manager Adriana Aldea estimated losses exceeding $6,000 over the three days. - with Pallavi Singhal, Angharad Owens-Strauss