The region's businesses were last night on tenterhooks as heavy rain threatened further insurance misery.

As premiums rise, industry warned that a compromise must be reached to stop firms being washed away.

The call came in the week that a two-year moratorium imposed by the Association of British Insurers (ABI) ran out.

Following the November 2000 floods, the ABI threatened to pull the insurance safety net unless the Government made widespread improvements to flood defences.

With a commitment of state spending reaching £150m annually in the next five years, the ABI has agreed that businesses and homes in areas to be protected by river defences cannot be refused cover on the grounds of flood risk. But the Government has yet to say if 200,000 properties will have their defences upgraded to one flood in 75 years or better.

Last night, George Cowcher, chief executive of the North East Chamber of Commerce, warned: "Several major businesses in the region are located on flood plains and significant increases in risk premiums or the inability to secure cover would be a major barrier to future prosperity."