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Insurance premiums to rise after storms

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Experts are predicting that this weeks storms will result in premium price rises, particularly for building insurance.

Motor insurers and home insurers both reported dramatic increases in claims as a result of the storms, with AA emergency response reporting a twelve-fold increase in the number of roofing claims it dealt with.

The AA is expected to publish data soon showing that motor insurance rates rose by about 3% in the last quarter of 2011 and home insurance prices remained flat.

Ian Crowder, a spokesman for AA Insurance said: “Major weather events like this, causing widespread damage are not going to help insurance costs come down.”

He said that while the rises aren’t expected to be too dramatic, housing insurance in particular may see some increases. The rises will be triggered, among other things, by extreme weather over the past few years and the expectation that this will continue. With last years freezing temperatures and snow followed by this years wind storms, Mr Crowder said insurance companies need to ensure they have sufficient reserves to meet future claims.

Mr Crowder added, “While major weather events might have a small influence on premiums, history shows that often they fall back again as competition bites.”

He said some experts predicted premium rises of 50pc following the 2007 floods – which cost the insurance industry billions – but premium incomes were far more modest the following year.