General insurers have paid out billions of dollars in claims since the start of 2009, in disasters ranging from Victoria's bushfires to freak hailstorms.
''They talk about one-in-a-100-year event,'' said Stuart Alexander, an insurance specialist with consultants Deloitte. ''Well, we had a one-in-a-100-year event in the bushfires, we had a one-in-a-100-year event in the floods in Brisbane, as well as the hailstorms in Perth and Melbourne and the earthquake in Christchurch.''
Deloitte estimates car insurance premiums rose 5 per cent last year, while house insurance premiums increased as much as 9 per cent.
Insurers have different ways to influence pricing, including adjusting the terms of a specific policy.
Insurance executives contacted yesterday said it was too early to predict what the impact flooding would have on premiums.
Michael Sherris, head of actuarial studies at the University of NSW's business school, said insurance premiums were likely to rise for all Australians in the wake of the floods, even in areas not prone to flooding, because insurers pool risks by averaging losses across all policyholders.
"As supply falls and demand increases, premiums increase,'' Professor Sherris said. ''In this case, demand is increasing due to the catastrophic floods, and supply is falling due to capital constraints on insurers.''
For those in areas hit by the torrential rain in Queensland and NSW, homeowners will find their costs rise, he said. "Premiums reflect the underlying risks so that those with houses nearby areas that are now flooded, they will now see they have relatively more expensive insurance." For the latest updates PRESS CTR + D or visit Stock Market news Today
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