A senior local government official claims some of the UK's leading insurers are making it difficult for landlords housing asylum-seekers to obtain buildings cover.
Local authorities are under severe pressure to find accommodation for asylum-seekers as the government moves to disperse them around the country.
Peter Coysh, regional manager of a consortium of councils caring for asylum-seekers in south-west England, said some private sector landlords are reporting increased difficulty finding insurance cover.
He said: "A number of landlords have told our member councils they are encountering a real problem securing cover. They say insurers are either upping their premiums considerably or are declining to extend their cover."
Coysh believes the situation could lead to a serious shortage of accommodation for asylum-seekers if landlords are priced out of the insurance market.
He describes insurers' reluctance to provide cover as unreasonable and is due in part to the negative image of asylum-seekers in the media.
"We are faced with an over-reaction based on early actuarial evidence and negative impressions from the media."
Coysh said insurers should be cautious about having an image of asylum seekers as likely to damage property, since, in his experience, they tend to be very law-abiding.
Some insurers are believed to be reluctant to insure landlords with asylum-seekers as tenants because they are considered a higher risk.