Insurers braced for flood of weather claims

Insurers were yesterday bracing themselves for a wave of flood damage claims as the Environment Agency said continuing rainfall meant the threat of flooding was reaching critical levels.

But the Association of British Insurers and some of the UK's largest insurers say the bill is unlikely to top the £1bn of claims in the aftermath of the floods that swept Britain in October 2000.

The ABI said while television pictures appear dramatic and have shown images of flooded homes and properties, the majority of the flooding has taken place in rural farm land, which is uninsured.

Norwich Union, part of the Aviva group, insures one in every five homes in the UK, but says it is not expecting a huge number of claims.

The insurers say it is still too early to estimate what the floods will cost. Halifax and Cornhill have said they are yet to experience a significant number of flood claim calls, but with another inch of rainfall forecast over the next day, they are preparing themselves for further damage. Many expect more calls to come through once water levels begin to subside and the extent of the damage can be assessed.

David Ross, of Norwich Union, said: "The average flood claim is between £10,000 and £15,000.It can be double this for a commercial property. There may not be a large number of claims but the individual claims will be for large sums."

The Government is under increasing pressure from insurers to improve flood defences. It is being urged to deliver on the extra £100m promised for flood defences by 2007. If these do not appear, insurers will be forced to hike premiums or withdraw the offer of cover entirely, leaving some homes uninsurable.

There are 2m homes in Britain's flood plain, according to the ABI, of which 1.8m are protected to the Government's minimum standards. About 200,000 are potentially at risk of being impossible to insure.