But they say they cannot guarantee coverage in the future of thousands of properties at risk of flooding unless the government spends billions of pounds to improve flood defences.

A report this month by the Association of British Insurers (ABI) said that without substantial extra funding to defend London and England's east coast against a predicted 40 centimetre rise in sea levels over the next few decades, a single major flood could cost as much as 16 billion pounds.

But it could take a much smaller flood to convince insurers that thousands of properties would be effectively uninsurable, a leading catastrophe-modelling expert warned.

"If there was a 2 billion pound flood, then I suspect (insurers) would say 'that's enough' and say it's up to the government to cover those people who live in the highest flood-risk areas," said Robert Muir-Wood, chief risk officer at Risk Management Solutions, which helped compile the ABI report.

The ABI says more than 2 million homes are currently at risk of flooding, or around 10 percent of total homes in the UK. Around 400,000 homes are at a very high risk of flooding, meaning there is more than a 1-in-75 chance of being flooded in any year.

Another 130,000 homes are likely to be at risk if the sea rises to predicted levels, which makes flooding a growing worry for insurers, for whom the average claim for water damage already amounts to around 40,000 pounds.

FLOOD SPENDING WORRY

Having paid well over 1 billion pounds in 1998, 2000 and again in 2005 to cover damages from floods that left thousands of properties under water, insurers are pushing the government to spend 8 billion pounds on better flood defences.

"We're putting as much pressure as we can on government to put sufficient flood defences in place to allow us to continue to insure at affordable premiums," said Arthur Philp, underwriting policy manager at Norwich Union, the UK's largest insurer and a part of Aviva.

"We genuinely believe the government wants to upgrade the defences to a point where this no longer becomes an issue," said Philp.

But insurers are alarmed by a 15 million pound cut in the flood defence budget this year and the lack so far of any future commitment on spending going forward.

At an ABI conference earlier this month, Environment Minister David Miliband tried to reassure the industry by saying, "I have every intention of working to make sure we honour our side of the bargain".

But insurers' demand that the government stump up a lot more cash for flood defences is undermined by the fact they still do not charge homeowners in the highest-risk areas the true premium their risk warrants, said Muir-Wood.

"The reasons I think are that they are very concerned about the political impact and the tabloid newspaper reaction too," said Muir-Wood.

Norwich Union's Philp says that if insurers were to charge the appropriate premium, it could be as much as 1,000 pounds a year for those homes in greatest danger of flooding, compared with the average house insurance premium of about 300 pounds.

In that situation, "it would be borderline as to whether or not it would be affordable," Philp said.

But this effectively amounts to subsidising those people who live in the most vulnerable areas and increases the likelihood that insurers will pull cover from many homes in the event of a major flood, Muir-Wood said.

"If the market was charging the technical rate for the risk, then insurance should work as it says on the packet. The cost shouldn't go up after there's a loss. But people aren't charging the right rate for the risk," Muir-Wood said.

As a result, "I think the insurance industry may overreact and say they won't cover people in the event of a really major flood," he said.

If that happens, UK insurers are likely to call for a government-backed pooling scheme, such as those in Spain or France, to cover the risk of flooding, Muir-Wood said.