Katy Williams can't afford the annual premium she was offered by her home insurance provider. 

With three boys still at school, she also can't afford not to have insurance.

"This is everything I own, it's all here in the house," Ms Williams said.

The mum from Charleville in south-west Queensland faces a precarious situation after learning that in order to retain flood insurance, her premium will triple from just over $5,000 to more than $15,000.

"As a single mother, $15,000 is just not doable, so I'm at that point where I'm thinking, 'Is it even worth insuring?'"

Insurance claims and costs surge

Ms Williams isn't alone in her scramble to either cover the rising insurance costs, shop around for a cheaper alternative, or go without.

The Insurance Council of Australia's (ICA) Catastrophe Resilience Report released today found floods were the most significant contributor to insurance claims in Australia of all extreme weather events.

The report showed more than 150,000 claims were made in 2023–24, nearly 75 per cent more than the period prior.

Over the past five years, the average annual cost to insurers from flood damage came in at $2 billion a year, up from $620 million annually in the previous 30 years.

"Flood is Australia's most costly natural peril," ICA chief executive Andrew Hall said. 

"It's estimated that around 1.2 million properties face some level of flood risk."

Those costs are rippling down to consumers.

Insurance prices increased by 14 per cent to record highs in the 12 months to June 30, according to data from the Australian Bureau of Statistics.

Mr Hall said the price increase had been experienced across the world. 

Mr Hall said while rising building costs and reinsurance (the insurance for insurance companies) impacted premiums, the most costly overall factor was the increasing severity of weather events.

"These are the three big factors that have created the upwards pressure on insurance premiums, not just here in Australia but across the board globally," he said. 

Extreme weather events have ravaged homes around the country in recent years.

Almost 100,000 claims were paid after severe storms at Christmas last year on the Gold Coast, parts of New South Wales and Victoria, costing insurers about $1.3 billion.

In the same month, Tropical Cyclone Jasper and subsequent flooding damaged 1,863 properties in Far North Queensland, which the ICA said resulted in more than $350 million in claims paid by June 30.

Earlier in 2023, widespread floods inundated the Gulf of Carpentaria and the New South Wales' south coast, while bushfires damaged property in Western Australia and southern Queensland.

The 2022 flooding event in south-east Queensland and northern New South Wales was the "biggest insurance loss in Australian history", with 250,000 claims costing insurers an estimated $6 billion, according to the ICA.

Should postcode determine premium?

The effect of climate change on insurance premiums has been under the spotlight as a senate select committee investigates the issue around the country.

Hearings have been held in Brisbane and Ballina, with the next hearing in Sydney in September.

Submissions are now closed but stakeholders — including insurance companies, environmental groups, individuals and councils — have made contributions.

The flood-prone town of Charleville — where Ms Williams lives — has made a submission.

Its mayor has called for insurers to take flood mitigation efforts into account.

"Instead of going off postcodes and what has happened previously, we'd like to see them recognise the flood mitigation in place," Murweh Mayor Shaun Radnedge said.

The town of nearly 3,000 people on the Warrego River has recorded several severe floods in recent decades.

In 2011, a flood levee was erected around Charleville to protect homes from future floods.

Since then, no homes within the levee have been flooded, according to the council.

Prior to the levee, it was a different story for those properties.

In 1990, more than 1,000 homes were inundated with floodwater and the entire town was evacuated after the Warrego river peaked at more than 8.5 metres.

In 2010, a flood higher than 6.5m inundated more than 400 properties, including Ms Williams' home.

To determine premiums, some insurance companies take a postcode-level approach, rather than considering the risk of each individual property.

Mr Hall said a blanket approach made the cost of insurance more expensive for some, but could reduce costs for properties in more vulnerable locations.

"Often they're the cheaper properties and therefore the people that can least afford a higher premium," he said. 

'It's a real gamble'

Ms Williams said the town's flood 14 years ago was the only time she had made a claim on her home insurance.

It's cover she was thankful to have when the repair costs came in at more than $120,000.

But now, the dilemma of a $15,000 premium means she is considering whether to drop flood cover from her insurance policy for the next year.

The senate select committee is due to present its final report in mid-November.