July floods cost insurers £1.5bn

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The total insurance bill for Gloucestershire's floods is estimated to be £1.5bn, according to the Association of British Insurers (ABI).

Thousands of homes and businesses were flooded and more than 200 roads were damaged during the July deluge.

The ABI said a government promise to increase flood spending by £230m by 2010 was not enough.

Spokesman Malcolm Tarling said investment was needed now to ensure premiums remained competitive.

Absorbed cost

"Let's be clear about this, there's no automatic assumption that premiums will rise, some companies may increase their premiums, some will absorb the cost," he said.

"Flood insurance remains at a competitive price, but what we need is for the government to invest now what they've promised in two years time.

"The investment is welcome, what is not so welcome is what will happen in the two years leading up to 2010."

He said that the £1.5bn figure was still an estimate, as many people were still unable to get back into their homes to review the total damage.

"It's a big event for insurers and we're geared up to deal with it," he said.

"It's what we expect to pay for bad weather - what made it unusual is that it came hot on the heels of the flooding in Yorkshire."