The hearing into the impact of climate change on the insurance industry was set up in May and will convene for the first time in Ballina on the north coast of NSW on Thursday, with local councils testifying about floods in their regions.
Councils and households are being hit with higher premiums with insurers citing the increasing size of payouts.
Companies have paid about $17 billion in claims from 13 disasters since the Black Summer Bushfires in 2019 and 2020, the Insurance Council of Australia says.
It says that is translating into higher premiums for all property owners and contributing to inflation.
Insurance prices rose 14 per cent in the year to the end of June, official data showed last week.
"Higher reinsurance, natural disaster and claims costs continued to drive higher premiums for motor vehicle, house and home contents insurance," the Australian Bureau of Statistics said.
In March 2022, insurers were hit with nearly 300,000 claims over losses from eastern Australian floods, which killed 27 people.
These floods cost the industry almost $6 billion, the biggest single payout in Australian history.
Insurance prices are set based on risks, meaning as extreme weather events become more common the price of insurance will continue to rise.
The direct costs from extreme weather events to the industry are estimated to grow by about five per cent each year and reach more than $35 billion by 2050.
The problem is made worse by increasing urban development in flood-prone regions that lack the infrastructure to mitigate the risk of property damage, the insurance council says in its submission to the inquiry.
The hearing will be chaired by Greens Senator Mehreen Faruqi and attended by representatives from regional NSW councils and community groups.
