People living in areas at greater risk of natural disasters should be prepared to pay higher home insurance premiums, the head of one of the country's 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 hikes of as much as 500 per cent after the wave of floods in eastern Australia in recent years.
Insurance Australia Group chief executive 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 in Sydney.
He said the NSW bushfires - which have resulted in $145 million in insurance claims so far - were unlikely to lead to further premium increases in themselves.
Nonetheless, the insurer 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 an analyst at financial comparison service Canstar suggests there have been especially big rises in some states hit by natural disasters, with Tasmanian premiums increasing sharply after bushfires last summer. Mitchell Watson said people directly affected by disasters were most likely to face big increases in premiums.
"Those premium increases may not become apparent for six to 12 months," Mr Watson said.
IAG sells insurance under the NRMA, RACV and CGU brands.
Referring specifically to the cost of flood cover, Mr Wilkins conceded IAG's approach was not popular with all customers, but said it was the responsible thing to do.
With Sydney on track to record one of the hottest Octobers on record, the NSW bushfires sparked a debate about whether they were evidence of human-induced climate change. But Mr Wilkins said climate change could not be singled out as being solely responsible, and there was not clear evidence showing natural disasters were becoming more frequent of intense.
"I think climate change is real, we actually believe in it," he said. "But we're not pointing to that and saying it's the sole source of all of the natural perils that we've seen over the last few years," he said.
Global warming was "a factor," he said, but growth in the populations of the eastern states and growth in urban centres also magnified the costs of major disasters.