The cost of home insurance could rise due to an increase in flood claims caused by the recent heavy rainfall in parts of the UK.
Insurance analysts have warned that insurers are unlikely to meet their profitability targets because of the number of claims that are being made, and are therefore likely to raise their premiums .
Ian Clarke, insurance partner at business advisory firm Deloitte, said: “Previous experience has shown that wide scale flooding has a significant impact on the level of claims borne by insurance companies and in recent years has tipped them into losses for their household accounts.”
“The overall impact of this will almost certainly be further premium rises for policyholders as insurers seek to recover the losses they have made.”
With further flooding expected over the next few days, analysts claim the situation be the same as in 2007, when heavy floods became the most expensive weather-related UK event for insurers and cost the industry around £3 billion – leading to some firms hiking their home insurance premiums by around 10 per cent.
They add that the cost of this year’s flooding will ultimately depend on whether more rain falls before the previous water levels have had a chance to disperse.
Recent claims data from Lloyds TSB showed that flooding causes an average of £17,000 damage per incident.