Devastating fires in Los Angeles could keep upwards pressure on insurance premiums in Australia at a time when many are already priced out of coverage.
Climate change is ratcheting up the frequency and scale of events like the disastrous wildfires still threatening lives and homes in southern California.
More severe and regular natural disasters have been putting pressure on the global reinsurance market, which can have implications for insurance costs back at home.
Insurance Council of Australia general manager of climate, social policy and international engagement Alix Pearce says it's still too early to predict whether there will be cost implications for local insurance markets from the LA fires.
"However, the California wildfires have occurred in the context of a global reinsurance industry that has already been stressed by more frequent and severe extreme weather, and rising inflationary pressures," she said.
Sometimes described as insurance for insurers, companies take out reinsurance from bigger global firms to limit their losses in the event they need to pay out more claims than expected, such as when a natural disaster hits.
Costs are still being assessed in the unfolding disaster but early estimates suggest insured losses could reach around $20 billion.
Ms Pearce said Australia remained well-insured overall but upwards pressure on insurance premiums was particularly evident in high-risk parts of the country, reflecting worsening extreme weather, inflationary pressures, global reinsurance prices and supply chain shortages.
"These factors are widening the insurance protection gap, leaving more Australians vulnerable when disaster strikes and putting increased pressure on government resources to respond," she explained.
For the body representing the insurance industry, reducing disaster risk - such as building more resilient homes and managing fire fuel loads - was the most effective way of keeping insurance prices under control.
Federal Labor MP Susan Templeman, member for Macquarie, says her constituents are already under pressure from elevated insurance costs.
"Anything that adds pricing pressure will make it harder for people to adequately insure their home so that if the worst happens and it is destroyed, they have a chance to re-establish themselves," she told AAP.
Ms Templeman has experienced the devastation of bushfires first-hand, having lost her home to a blaze in the Blue Mountains in 2013.
She's also acquainted with the damage caused by under-insurance, with herself and others in her community discovering only after losing their homes their insurance would not cover the full cost as new bushfire resiliency standards had made rebuilding more expensive.
"What it meant is that a whole lot of people simply found they could not afford to rebuild, so in a single afternoon, a community was just smashed, but about two-thirds of that community then didn't ever come back," she said.
A federal inquiry following the 2022 floods found households in flood zones were paying as much as $35,000 a year for home insurance, with affordability strained in bushfire-prone areas but to a lesser extent.
Ms Templeman highlighted the focus on mitigation and prevention measures as key recommendations in the report
Federal independent MP Zali Steggall described climate risk as an iceberg issue, with the true scale of the problem going unrecognised.
Poor insurance affordability not only causes financial stress, she said, but high rates of underinsurance or no coverage at all in housing is risky for the broader banking sector.
"It's a massive problem," she told AAP.
She said too much government money was funnelled into disaster response - as much as 95 per cent - with only a small amount put towards disaster mitigation and prevention.
"The data says if you invest about $1 in prevention, you save $11 on disaster costs," she said.
