ABI: £2bn home insurance payout for floods

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More than £2 billion could be paid out to home insurance customers following the recent floods, the Association of British Insurers (ABI) states.

The ABI reveals it has now received over 50,000 claims from residential and business customers, including those previously flooded in Yorkshire.

With estimates of about £1 billion for the recent floods and the figure for Yorkshire claims combined, insurers could be facing a payout of £2.5 billion, the association adds.

Nick Starling, director of general insurance and health, says: "Our members are working flat out, but dealing with two massive events in a short space of time inevitably means that things may take a little longer.

"Where areas are under water we must wait for the water to recede before we can do anything to assess the damage."

Credit reference agency Experians CreditExpert service detects a drop in consumer confidence following the floods.

A four-point slump - the largest quarterly drop on record - was found in the firms Personal Credit Index in the second quarter of 2007.

In areas hit by floods, such as the West Midlands, the drop was larger at nine points, with CreditExpert suggesting the need to replace water-damaged belongings has impacted on consumer confidence in the region.

Managing director Jim Hodgkins advises vigilance in the coming weeks for these citizens in order to avoid further damage to their credit rating.

"Many of those affected by the floods will have lost documents with personal details on - sadly some will see this as an opportunity to steal an identity for their own personal gain," he warns.

"Equally, people who are feeling uncomfortable with their finances should monitor how they are managing their credit."

Barclaycard responded to the crisis this week by announcing a one-month suspension of minimum repayments, with interest frozen on the minimum amount due and no late fees to be charged for borrowers who live in flood-affected areas.

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