COUNCIL officials have criticsed an insurance company for unexpectedly increasing its premiums by £400,000.

The extra money must now be clawed back from Darlington Borough Council's budget, and could mean increases in future council tax bills or cuts in services in the town.

Insurance company Zurich Municipal levied the increase on the council last week, just before its policy was due for renewal. The council's insurance covers four main areas - buildings, claims from the public, claims from council staff and vehicle insurance.

It means the authority will be paying 94 per cent more than last year on its property insurance and 44 per cent more to cover claims from the public.

The council claims it was told of the huge increases only last week, leaving it insufficient time to get alternative insurance quotes.

Council leader Councillor John Williams said: "Zurich's behaviour has been absolutely outrageous.

"We only heard about their demands last week, and because of the legal scales involved regarding retendering they have got the council over a barrel. The council will be working hard to reduce the effect of the increase so that the situation does not affect council tax levels or the services we provide."

Zurich Municipal has blamed the premiums increase on various national and local factors.

It says that when it became the council's insurer, the company underpriced its product in order to get the contract, but now needed to raise it to a more competitive figure.

It also said there had been an increase nationally in the number of insurance claims made, although the amount of claims from Darlington council had been described as satisfactory.

Other factors blamed by the company include an increase in bad weather claims and new types of claims being made, such as for stress in the workplace and bullying.

A company spokeswoman said: "We realise this is a significant increase and there are a number of factors behind it.

"It takes time to put a quote together and to put terms back to a client, but we try to do it as quickly as possible especially if we know there are going to be increases. Darlington Borough Council is a valued client and we are keen to resolve this."