There is near-universal agreement that more needs to be done to mitigate the risks, such as upgrading buildings to be more resilient to cyclone or flood damage. But the amounts of investment needed to do this at scale are vast.

The government is also trying to build up its data on insurance affordability, which it hopes can help inform households about ways to cut their insurance bill. What can Jones do to push insurers to pass on any savings?

While the government took the controversial step of intervening directly in the energy market to bring down prices, Jones appears more likely to apply indirect pressure on insurers over their pricing.

It’s possible he could bring in the competition regulator – as the government did to scrutinise banks’ deposit pricing – though it’s still early days.

In the insurance companies’ defence, they maintain that individual customers can often get discounts when they have made appropriate changes to their homes.

But unfortunately for the wider community, there are no signs of a broader decline in insurance premiums anytime soon. Official figures last week said average home premiums surged by 14.3 per cent in the March quarter compared to last year, while average car insurance premiums jumped 11.6 per cent, Jarden analysts report.

Perfect storm

Insurers explain such rapid growth in premiums by pointing to a perfect storm in the industry.

First, they blame a horror run of natural disasters, capped off by last year’s disastrous floods in NSW and Queensland, which led to $5.8 billion in claims, making them the most expensive extreme weather event in the country’s history.

The wild weather not only drove up insurers’ costs from paying out claims, it also made global reinsurers (insurance companies to the insurers) more tentative about Australia, leaving the local players holding more of the risk themselves.

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Second, they point to soaring building material costs, shortages of tradies and car parts, and other sources of inflation that are being passed on to customers.

Investors, meanwhile, generally view insurers as winners from a backdrop of high inflation and rising interest rates – notwithstanding the risk that inflation can eat into profits if insurers underestimate the cost of future claims.

Local giants Suncorp, Insurance Australia Group and QBE have all enjoyed strong share price gains of more than 10 per cent this year, compared with a rise of less than 4 per cent in the wider market.

One reason for the rise is that insurance companies make higher returns on their bond portfolios when interest rates are rising. But the surge in premiums is no doubt supporting investor confidence as well.

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