Motor insurance premiums are likely to increase by around ten per cent as a result of the recent flooding to hit the UK, it has been claimed.

EMB, Europe's largest actuarial firm, claims that the floods, which may cost insurance firms over £3 billion, will have a knock-on effect on motor insurance premiums. The industry has charged unsustainably low motor insurance premiums in recent years, the firm argues - keeping figures low by using crossover profits from UK property cover, says EMB.

"There's clear evidence that they've been using some of these profits to cross-subsidise their motor book," EMB senior consultant Paul Moorshead told news agency Reuters.

"That will stop in light of the heavy claims they're getting from the floods," he added.

Motor insurers last year made a loss on their products, paying out £111 in claims and expenses for every £100 they took in premiums - and EMB says that companies can't continue to underwrite this loss for much longer.

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