Premium hike warning as bill for damage soars to €200m

Insurers were last night warned not to use the chronic floods that have devastated large parts of the country as an excuse to hit all consumers with excessive premium rises.

The warning came after it was confirmed by the Irish Insurance Federation that all consumers are to be hit with higher premiums because of the floods in the past few days.

But home insurance premiums have already shot up by 25pc in the past 12 months, with insurers claiming there have been a higher level of claims in the last year.

Now premiums are set to rise again as insurers pass on the cost of the latest floods to policy holders.

However, the Consumers' Association of Ireland (CAI) last night said the floods should not be used as an excuse by insurers to pile on excessive increases in premiums.

CAI chief executive Dermot Jewell called for an Oireachtas Committee to check that any increases imposed across the board were justified by the flooding claims costs.

"The cost of the flood claims should not be used as an excuse to exploit consumers," he told the Irish Independent.

He added that premiums had risen by a quarter in the past 12 months, a situation which demanded there was greater scrutiny of the industry.

The Irish Insurance Federation's Michael Horan said premiums were bound to rise next year. But he denied insurers were set to use the latest floods as an excuse to further push up premiums for everyone.

"Premium levels are dictated by the cost of claims. The value of claims last year was up 56pc on the level in 2007," he added.

Lost

He said insurers had lost €160m on home insurance last year.

Loss adjuster firms said it was looking like the level of claims would double the €96m cost in August 2008.

Caitriona Somers of Cunningham Lindsey said that this time there were likely to be a larger number of commercial claims, which would put up the cost of the damage. She said loss adjusters had been assessing the damage since Saturday, but insurance companies were bracing themselves for a rash of claims in the next few days.

Insurance analyst with Goodbody Stockbrokers, Anna Lalor, said insurers would push up premiums, as they did in August 2008.

"The autumn 2008 floods were a catalyst for increases in home insurance pricing as insurers attempted to recoup some of their losses and prices rose from their lows.

"It is likely that this month's floods will lead to greater momentum in home insurance prices (and possibly other forms of insurance, given the widespread damage to vehicles and businesses)."

Over the weekend, insurance firms rostered extra staff to deal with the level of calls from policy holders, and staff have been asked to assess claims as quickly as possible.

Hibernian Aviva last night said it would give advance payments of up to €1,000 to homeowners and businesses to cover immediate expenses due to the extreme flooding.

It said that this was the first time an insurance company had done this.

Last night, Quinn Direct said it would protect the no-claims bonuses of customers making a claim for flood damage if they contacted the insurer by close of business today.