The cost of insurance will remain high for the rest of the year – even without high storm activity – according to a study by The Times of London.

The newspaper says insurance rates rose 12% on average in the UK during the first six months of the year as a direct result of last year’s high storm and hurricane activity.

It says the cost of insurance is expected to rise further by the end of the year. “A radical change in the way in which insurers calculate the cost of risk, along with a reduction in capacity, is likely to ensure rates will not fall substantially next year,” the report said.

The Times compiled comments from industry analysts, who suggested premiums are unlikely to fall going into next year, as pricing models used by insurers increased the estimates of the cost of claims from bad weather.

“The models had dramatically under-estimated the rise in labour costs as a result of demand after last year’s floods in New Orleans and other areas, as well as the cost of business interruption,” the report said.