People living in areas at greater risk of natural disasters should be prepared to pay higher home insurance premiums, the chief of one of the country's biggest insurers says.
After NSW this month faced the worst bushfires in decades, the disaster has put the focus back on how people in high-risk areas protect their homes and possessions.
Home owners in flood-prone areas have already been hit by price rises of as much as 500 per cent after damaging floods in eastern Australia in recent years.
The chief executive of Insurance Australia Group, Mike Wilkins, said on Wednesday that although cover for bushfires was different to flood cover, the "concept" of passing on risk to customers was the same.
"We try to price on the risk that's presented to us and if you live in a bushfire-prone area, we are going to rate you from a risk-pricing perspective on that," Mr Wilkins said.
He stressed that the NSW bushfires - which have resulted in $145 million total insurance claims so far - were not likely to lead to further premium increases in themselves.
Nonetheless, the company expects to push through increases in the "low single digits" for home cover this year, after average premium increases of 10 per cent or more in recent years, a trend blamed on a spate of natural disasters.
Research by analyst at financial comparison service Canstar, Mitchell Watson, suggests there have been especially big rises in some states hit by natural disasters. People directly affected by disasters were most likely to face big increases in premiums, he said.
IAG sells insurance under the NRMA, RACV and CGU brands.
Referring specifically to the cost of flood cover, Mr Wilkins conceded the company's approach was not popular with all customers, but said it was the responsible thing to do.