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TWO of Britain's biggest insurance companies today gave stark warnings of big price rises to come for motor, home and commercial cover.

CGNU, Britain's biggest insurer, and Royal & Sun Alliance both said they had increased premiums by up to 20 per cent in the past year and warned of further rises to come.

The insurance industry blames the hikes on Britain's ever more litigious compensation culture, which has seen liability claims rocket in recent years.

Also, it points out that premiums were kept artificially low for nearly a decade as cut-throat competition hammered down prices.

R&SA chief executive Bob Mendelsohn said: "British motor rates are up about 11 per cent and household cover is about four per cent higher. Commercial insurance, where claims costs are rising very rapidly, is up 20 per cent or more."

He pointed out that a number of companies around the world, such as Britain's Independent Insurance, were going to the wall because they had priced their premiums too cheaply and were unable to meet their claims. The recent collapse of Independent left thousands of policyholders without cover.

Many of the 100 million-worth of customers who switched to R&SA faced premium increases of up to 50 per cent when they transferred.

Despite complaining about the rising costs of claims, both companies today reported massive increases in profits from selling general insurance cover.

CGNU reported underlying profits before tax on general insurance soared 124 per cent to 427 million in the six months to 30 June, while R&SA's jumped 58 per cent to 344 million in the same period.

Mike Naylor, senior researcher at consumer magazine Which? said motor insurers were increasing premiums dramatically in order to make up for losses in previous years. But he stressed: "The message to buyers is that you have to shop around on renewal. Even if the company offers you a loyalty discount, there is still evidence that you can save money by looking around for other quotes."

While CGNU and R&SA did not give details on how much they expected premiums to rise in the coming months, the AA's insurance arm forecast motor insurance would go up 10 per cent in the second half of the year, having already increased 20 per cent since the beginning of January.

Household cover, would rise five per cent in the year, it forecast.

AA figures show an average married 36-year-old woman in London's Belvedere would already have seen the cover for her Nissan Micra jump from 706.34 last July to 930.48 now. A further 10 per cent by December would take the cost of that cover up to 1023.52.

SHELL revealed today that record earnings from its petrol division had helped it to reporta 15 per cent profit rise for the first half of the year to 5.3 billion.

Profit from the oil products division, which includes its petrol station forecourts, soared 52 per cent to 1.4 billion. Shell said low er oil prices had resulted in higher margins on fuel sales but it defended its petrol prices, saying they w ere among the cheapest in Europe.