Home insurers are nursing their wounds, as it emerged that last year's severe floods contributed to losses of £300 million.

According to independent market analyst Datamonitor, because reinsurers picked up some of the tab, this was less than might otherwise have been the case.

Home insurers made a profit of £167 million in 2006 but, as a result of the storms, they made losses of over £300 million in 2007.

Nevertheless, profits, barring a repeat of the freak weather conditions last year, should recover this year.

Mahreen Hussein, from Datamonitor, explained: "While the market suffered heavy losses in 2007, premium income actually held up pretty well, and as long as premium rates don't decline in 2008 we are forecasting a return to profit for the household insurance market."

However, consumers will be relieved to hear that fierce competition between insurance companies is expected to keep premium levels stable.

It is estimated that last year's devastating summer floods cost the insurance industry around £3 billion.

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