Insurers welcomed the decision by the water regulator Ofwat to increase price limits on water companies, but called for more action on compensation.

The ABI said Ofwat's decision to increase consumers' water and sewage bills to 4.2% year on year would 'significantly reduce the risk of sewer flooding'.

But Norwich Union head of property claims John Wickham said more could be done to increase compensation payments made by water companies when customers suffer sewage flooding.

He said: "While we welcome the announcement it does not deal with everybody who has a problem. There will still be some people who will suffer sewage flooding. There is more they [the water companies] could do."

Wickham called on the government and the regulator to increase the levels of compensation from the current rebate on sewage rates, to reflect damage inflicted by sewage flooding.

He said: "If the insurer has to pay out, then cost inevitably gets passed back to the customer in the form of higher premiums."