Household insurance premiums could rise by between five and 10% at the end of 2007 as a result of in-creased catastrophe claims to hit UK insurers, according to Equity Red Star.
Flooding in Yorkshire and southern regions of England, coupled with storms in January of this year, may force insurers to revise both residential and commercial property insurance rates.
Stuart Heath, deputy household underwriter at Equity Red Star, said: “Reinsurance premiums are probably going to go up when companies get around to reviewing their [reinsurance] programmes. That has a knock-on effect on their bottom line and as reported, it has been a soft market.
“I would be absolutely stunned if it doesn’t cause a rate increase in Q4. I wouldn’t be surprised if we get somewhere between a five and 10% rate rise.”
Some insurers have played down the impact the latest round of floods will have on premiums, insisting that when risk assessments are made the prospect of inflated claims are taken into account.
An ABI spokesperson said: “Premiums will have to go up, but by how much? Individual insurers will have to assess what they have paid out at the end of the year and set their premiums accordingly.
“To put it into context, insurers paid out £450m for floods last year and this year already we’re saying £2.5bn.”
Organations, including Fitch and RMS, have said that insurers would be forced to reconsider the provision of flood insurance in the future.