Climate change is a clear and present danger in the rapidly expanding towns and suburbs of north-east NSW and south-east Queensland.

As the wild weather continues and claims mount - Australian insurers are paying out $70 million a day in weather-related claims - insurers could be forgiven for at the very least urgently readdressing their rates. So far they haven't.

Events such as last August's Sunshine Coast floods, October's Lismore hailstorms (20,000 claims for a total cost of $57 million) and last month's Northern Rivers storms (1500 claims at $12 million) would have barely registered before the population boom of the past 10 years.

Potential exposures have soared as seachangers flock to low-lying coastal condos and seafront apartment blocks. In the five years to June 2006, Tweed shire in NSW's far north coast was the state's fastest-growing shire, with an increase of 8400 people, or 2.2% a year.

And the Gold Coast and Sunshine Coast are the fastest growing regions in Australia, increasing by 85,500 (3.7%) and 48,000 (3.6%) respectively.

As the combination of population growth and apocalyptic weather threatens to render these areas more difficult to insure, who will take the poisoned chalice?

Not QBE, that's for sure. The insurer's canny small-target strategy sees it effectively insulated from climate change by minimal exposure in fast-growing regions at risk from weather-related extremes.

But Suncorp and IAG will be forced to share the pain during this week's interim results round-up.

One option is to ramp up reinsurance levels and move the risk off the books. Suncorp has spent $15.2 million on a retention buydown program that halves its catastrophe retention from $200 million to $100 million, dropping to $50 million in the case of a further loss.

But, given the fact it paid out $280 million in weather-associated claims in the second half of last year, some might say the horse has already bolted.

The other option is to start pricing risks correctly.

Last year's KPMG's General Insurance Industry Survey contained stark advice for underwriters not sure on how to deal with loss-making classes of business. "The economic value of such classes can often be improved significantly by taking direct, prompt remedial action on unprofitable segments or policy groups."

That means more pain for policyholders as insurers hike premiums in disaster-prone areas.

KPMG analyst Andries Terblanche says climate change touches everything.

"It flows into the terms of policies, the pricing of policies and all our catastrophe protection," he told insuranceNEWS.com.au.

He says insurers will start readdressing policy wording and pricing as they attempt to stem the losses.

"It will result in either tighter terms or increased premiums."

While Mr Terblanche doesn't necessarily believe insurers will exit these regions altogether, he reckons the issue of whether to insure climate change-affected areas is "going to be revisited at the very least".

"There are increasing questions being asked about equity between policyholders and a better sense of the comparative differentiation between policyholders," he said.

"Insurance companies will ask themselves the question: ‘Is it fair on other policyholders to charge a premium that's the same when you know they are less likely to claim?'"

Household insurance needs to be segmented and priced as accurately as car insurance, Mr Terblanche says.

"If we know that some drivers are more prone to accidents than other age groups, is it fair to charge the same premiums?" he said. "It comes down to equity for policyholders. Increasing segmentation may well result in price differentiation."

Insurers take their community responsibilities seriously, but not to the extent they will continue to write unprofitable business in a softening market.

While they need to pay lip service to fighting underinsurance in the court of public opinion, the reality is the insurers are not going to underwrite household policies at unprofitable rates - Zurich's recent (and uncosted) commitment to commercial policyholders notwithstanding.

They're in business to "make a buck", as CGU Head of Regional and Rural John Evans revealed in a welcome display of candour during last year's otherwise touchy-feely Insurance Ombudsman conference.

"We are private enterprises and we have to create a return on capital."

Exactly. And that's why homeowners in disaster-prone areas will soon be paying more for less.