Motor claims resulting from the recent flooding could reach as much as £25m, according to the ABI.
Some have suggested that the event could act as a trigger for rate increases in the private motor market. But insurers, already reeling from a £1.5bn household bill, have played down the impact of the damage.
Although the total number vehicles damaged by the floods is less than previously feared, these are characterised by a high ratio of total losses.
John Josiah, head of underwriting at Equity Red Star, said: “We have been beginning to see rates moving forward. This event could be another factor.
“The sudden nature and location of the floods in cities means that dispropor-tionately more cars have been hit. There will be a noticeable impact on claims.”
A spokesman from Norwich Union said: “The motor claims losses have been significant – but not catastrophic.” He added it was “too early to say” if the flooding would impact on premium, although he did not rule out the possibility.
Recent surveys have suggested that the private motor market is showing signs of hardening.
Meanwhile, the ABI has called on the government to commit £8bn worth of public funds to flood defences over the next 25 years.
It also hinted that the £1.5bn cost of claims could increase in the coming weeks.
While it welcomes the overall increase in flood defence spending, which is set to rise to £800m over the next 3 years, the ABI insisted that more clarity is needed on the Comprehensive Spending Review settlement.
Stephen Haddril, ABI director general, said this week: “At the moment we have no details on the first and second years of the plan. The government needs to come up with those figures soon.”
The ABI suggested that the Environment Agency needs to put a more long-term plan in place to meet the growing threat of extreme weather, prompting the call for a 25-year plan.
Priorities include maintaining the existing drainage system as well as improvements to coastal defences and the Thames barrier, the ABI said.
