LONDON (Bloomberg) — UK insurers including Aviva Plc and Royal & Sun Alliance Insurance Group Plc may face higher claims as more bad weather increases record flooding costs.The UK's Met Office was expected to issue an "early warning" forecast today for heavy rainfall of as much as 1.2 inches over about 48 hours beginning on Sunday as an Atlantic weather system is predicted to collide with warmer continental European air, spokesman Barry Gromett said yesterday.

"With the effects of the recent flooding still in water courses the last thing you perhaps need is more heavy rain," Gromett said. The Met Office, the government's weather- forecasting bureau, is in discussions about the warning with the Government's Environment Agency, a body charged with maintaining the country's flood defences, Gromett said. The Association of British Insurers estimates insured damages from storms in the north of England last month, in which at least four people died and hundreds of families were forced from their homes, may exceed $1.5 billion ($3 billion), spokesman Malcolm Tarling said today. That makes it the worst UK flooding loss on record, according to Risk Management Solutions Inc.

The Met Office's decision to issue a warning tomorrow is subject to the results of its final forecast models.

About 27,000 homes and 7,000 businesses have been affected, according to the ABI, which represents more than 90 percent of insurance business in the UK. The association is in discussions with the government about measures insurers are taking to ease the hardship for customers, including speeding up payments to claimants.

UK insurers will shoulder most of the claims costs with little being covered under reinsurance agreements with other companies, said Kevin Ryan, an analyst at ING Financial Markets in London. London-based Aviva, the UK's largest insurer, said last week that flood claims of $175m may reduce first-half profit, adding that the cost is "subject to uncertainty." Royal & Sun, the country's No. 2 non-life insurer, predicts $55m of claims in the period.

Insurers will have to increase rates to maintain underwriting profitability, Ryan said. "They aren't going to hang around. If your rates aren't going up you are getting further out of the money in terms of settlements," said Ryan. Customers' concerns over future flooding may make it easier for insurers to push increased rates through.

The UK had its wettest June since 1914, the Met Office said last month.