The flooding disaster in NSW and Queensland has led to predictions home insurance premiums will rise more than 10 per cent next financial year, as insurers pass on the mounting cost of catastrophes.

After torrential rain and flooding hit east coast communities in recent weeks, insurance companies have already received more than 100,000 claims, which experts say will leave the industry with a multibillion-dollar bill.

The exposure of Australia’s biggest insurers – Insurance Australia Group, Suncorp and QBE – is capped by reinsurance policies with global insurance firms. Even so, industry experts say the disaster will still result in premiums, which were rising at 7.6 per cent a year, increasing even more quickly.

The prediction of premium hikes comes as IAG on Wednesday lifted its allowance for catastrophes by $550 million to $1.1 billion, with claims expected to rise as residents return to flood-devastated areas.

Analysts at investment and advisory firm Jarden on Wednesday said premiums for home cover jumped by about 7.6 per cent in 2021, and the growth rate was likely to lift to more than 10 per cent in the 2022 financial year.

Analyst Kieren Chidgey said Australian insurance companies would face higher costs on several fronts. Alongside the pressure on rebuilding expenses due to labour shortages and a jump in the cost of building materials, he said reinsurance companies would demand higher premiums when they renegotiated their policies with local insurers.

“Off the back of these events we would expect more pressure on reinsurance pricing. That’s a higher input cost that insurers need to pass on through their pricing back to consumers,” Mr Chidgey said.

Australian insurance companies have repeatedly raised their budgets for disaster claims in recent years after underestimating natural peril claims. Mr Chidgey predicted further increases in insurers’ allowances for catastrophes, which would be a further cost to pass on to customers.