Insurers to pay out £426m over Christmas and New Year storms

Insurers are to make around £426 million worth of payouts for the destruction caused by severe flooding and storms over Christmasand New Year.

The Association of British Insurers (ABI) made the estimate after 174,000 claims for homes, businesses and cars which were damaged by the bad weather were dealt with between late December and mid January.

The latest bill comes after around £160 million worth of payments were made to those people affected by the St Jude storm which battered the country last autumn.

ABI director Aidan Kerr said insurers will work closely with customers to get repairs completed as soon as possible.

He said: "This was a traumatic event for those affected, and shows the importance of having adequate property insurance. The insurance industry is fully prepared to deal with the damage caused by bad weather like this."

According to the ABI's figures, the Great Storm of 1987 cost around £2 billion in today's money while the summer floods of 2007 resulted in a hit of more than £3 billion.

The ABI gave the £426 million estimate as it was claimed that there has been two decades of under-investment in flood defence work in the Somerset Levels.

Properly-maintained flood plains would "drain away within a matter of days and then be ready for the next flood", she said.

Furious residents are demanding action after being left facing what they describe as Third World conditions, with "overflowing" septic tanks and water in their homes following the heavy rain.

Environment Secretary Owen Paterson promised a new plan to deal with flooding in the region within six weeks after facing anger on a visit yesterday.

His visit was dismissed by local campaigners as a "publicity stunt".

The Environment Agency has insisted that increased dredging of the rivers would not have prevented the recent flooding and was "often not the best long-term or economic solution".