Household premiums will be hiked following increased labour costs and extreme weather conditions.

Royal & SunAlliance household underwriting manager Alan Gairns said: "Discussions are happening and messages are coming through to put rate increases through."

He said a shortage of builders had increased labour costs, which had a "knock-on effect for insurers".

Elite Incident Management head of network operations Clive Rolfe said the shortage was because repairers had not been able to make capital investments.

He said: "Insurers have tied the repair process to a tight profit margin.

"Insurers are tying costs down severely and have to make sufficient profits to invest in technology for example. Repairers find it difficult to get profits."

Gairns said the unexpected extreme weather events had an adverse effect on insurers and were another factor in driving up premiums.