With images of the devastation and destruction wrought by Cyclone Debbie playing out across our screens, a question lingers in the minds of Cairns homeowners: how will this affect our insurance prices?

It’s a question that, for now, has only a vague answer.

Homeowners in the Tropical North pay high household insurance premiums as the result of being in a cyclone risk area.

Average premiums in the region are more than double those paid in Melbourne and Sydney, and an estimated one-and-a-half times the amount paid in Brisbane.

COMMERCIAL MATTERS

The Insurance Council of Australia told TropicNow that decisions about changes to premiums were “commercial matters for individual companies.”

“Insurers anticipate cyclones in north Queensland at this time of year and the risk of cyclones and floods is already priced into premiums for homes and businesses to an individual address, not to a postcode", said Campbell Fuller, the ICA's General Manager of Communications and Media Relations.

“Insurance premiums are underwritten based on the assessed level of risk for an individual property for the 12 months of the policy.

“Insurers make prudential arrangements to ensure they can meet their financial commitments to all affected policyholders when natural disasters occur, including purchasing reinsurance.

“The Australian Government Actuary concluded insurers were pricing appropriately to risk and were not gouging.”

'NO SINGLE EVENT' SHOULD IMPACT PREMIUMS

A Suncorp spokesperson told TropicNow that premiums were “priced to a number of risk-based factors.”

“We have processed millions of claims and have sophisticated risk modelling – one single event will not necessarily affect insurance premiums,” the spokesperson said.

Mr Fuller said that even though Cairns had not been affected by a cyclone since Yasi in 2011, cyclone premiums would remain a part of homeowners’ policies in the Tropical North.

“The absence of cyclones in a region for a given period is not evidence that a cyclone is less likely to occur in the 12-month period subsequent to an insurance policy being purchased.

“The only sustainable way to lower household insurance premiums in cyclone-exposed parts of the country is through mitigation and resilience measures that reduce the risk of cyclone damage.”

The ICA said weather bureau data showed Cairns has historically been impacted by a cyclone within 50km every six years, compared with four years for Townsville, Ayr and Innisfail. Tully typically experiences a cyclone within 50km every five years while Mackay is affected every 11 years.

Insurers have paid more than $3.6 billion in claims for cyclone damage in North Queensland since 2006 (including $1.4 billion from Cyclone Yasi and $544 million from Cyclone Marcia), and a further $3.2 billion for flood claims.