Rising Water Levels Prompt Rising Premiums

As the floods subside in many areas of the country ,Norwich Union, the biggest home insurer announced it is to raise premiums by an average of 10 per cent .The firm, which insures about one in five homes, is the first to announce a rise in household premiums but other leading insurers are likely to follow suit.

Norwich Union insisted the increase, which will take effect from Monday, is not solely linked to the flooding. However, as each claim is assessed individually, those whose live in flood-risk areas are likely to be hit the hardest.

A spokesman for Norwich Union said: "There is a flooding element, but it is not solely flooding-related. We've been reviewing our premiums for some time and they have been more or less static for 10 years." But she added: "We have had three very serious weather events in the last year."

Lloyds TSB said it expects its household insurance premiums to increase by about 10 per cent, while Direct Line and Churchill, both owned by the Royal Bank of Scotland, also announced they expect premiums to rise, but declined to say by how much.