Homeowners in high-risk areas of the NT can expect premium rises of more than $500 as the Territory Insurance Office (TIO) rolls out its first risk-based pricing model.

Previously policyholders shared the cost of flood, cyclone and storm surge, regardless of where they lived.

Since introducing risk-based pricing earlier this year about half of TIO premiums have fallen or held steady, while 35% have risen by less than $100.

The remaining 15% will rise more than $500, but increases will be phased in over three years.

Nicholas Scofield, spokesman for TIO’s parent company Allianz Australia, told insuranceNEWS.com.au the portfolio previously did not reflect “the real risk we carry for our customers”.

“Territory homes face a range of risks,” he said. “Cyclones, floods, storm surge and bushfires have taken their toll many times over the years and it is inevitable homes will be affected again.

“That’s why we are moving to a risk-based model, so we can continue to be here when Territorians need us the most.”

The new pricing model is also fairer, Mr Scofield says.

“Residents living in Tennant Creek should not be paying for cyclones. Residents living in areas not prone to extreme flooding should not be paying the same as those who are.”

Customers facing price rises above $500 are being contacted individually.

“We realise it will not be easy for some of the customers affected, which is why we are working with them to look at their options,” Mr Scofield said.

He says TIO started considering a risk-based pricing system three years ago, but this was put on hold when the NT Government decided to sell the insurer. Allianz bought TIO in 2014.