Claims costs could soar if the government fails to take action to lower carbon emissions, the ABI has warned.

It delivered the message this week to the Secretary of State for Environment, Food, and Rural Affairs, Margaret Beckett, in the hope that she would lobby the G8 summit on the issue next week.

It is understood AXA chief executive Peter Hubbard, who is speaking at the summit, will suggest that firms flouting carbon emission regulations in the future will see premiums rise. Some companies may even face the prospect of being classed uninsurable, Hubbard believes.

At the launch of its summary report, Financial Risks of Climate Change, the ABI demanded that the government develop sophisticated analyses of the impact of climate change on flood risks in the regions. The report claimed that if carbon emissions doubled, insurance losses could rise to an annual $27bn (£15bn) by 2080.