June 29 (Bloomberg) -- Allianz AG, Europe's largest insurer, said it may boost insurance premiums in the future as the increasing frequency of floods and heat waves boosts claims because of global warming.

``We are very alive to this issue when setting rates,'' Andrew Torrance, chief executive of Allianz Cornhill Insurance Plc, told reporters yesterday at a London meeting. Presently, ``we feel we are getting sufficient premiums.''

Munich, Germany-based Allianz said in a statement it would spend as much as 500 million euros ($600 million) on renewable energy investments in the next five years, more than double the 200 million euros it had already spent. That will help curb production of greenhouse gasses caused by burning coal and natural gas for power generation.

The insurer also called on governments to set specific multi- year energy and transport policies beyond 2012, limiting production of greenhouse gasses blamed for global warming. European floods in 2002 and a 2003 heat wave together cost Europe 26 billion euros, Allianz said in a new report on how the finance industry might respond to global warming.

The heat wave in 2003 that caused 27,000 deaths in Europe ``could be routine'' by the end of the century, the report said. Funds managers and banks should spend more to evaluate how economies, industries, markets and asset values may be affected by climate change, it said.

The price of December 2005 European carbon allowances yesterday rose as high as a record 24.20 euros ($29.22) a metric ton, beating the previous day's closing record of 23.75 euros, according to the European Climate Exchange.

Starting this year, power plants and factories in the 25 EU countries must have an allowance for each ton of carbon they emit. Companies that emit more need to buy allowances in the market; those that emit less can sell their surplus.

Carbon prices have almost quadrupled since January, boosting costs for utilities including RWE AG of Germany and prompting power-price rises.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

Last Updated: June 28, 2005 18:06 EDT