Flooding in NSW and Queensland is likely to lead to insured losses of at least $1 billion and possibly $2 billion, making it one of Australia’s worst flood events on record, S&P Global Ratings said today.

The Insurance Council of Australia (ICA) says claim numbers have soared past 48,000 – up 53% from yesterday - and forecasters are still warning that parts of Sydney could yet be impacted.

ICA says CEO Andrew Hall is in Brisbane today meeting with government stakeholders to report on insurers’ activity and “ensure the recovery process fully supports impacted communities”.

This comes after newspapers quoted Prime Minister Scott Morrison as calling on insurers to “deal fairly with victims”.

Mr Hall’s discussions have included “the availability and affordability of flood cover” and ICA has also coordinated an aerial survey of impacted zones to prepare high-resolution imagery of the event.

The Australian Financial Review today featured a business owner from Lismore, NSW, who says his broker has confirmed he does not have flood cover.

“99% of businesses in Lismore would be in the same boat. Unless you are capable of paying $80,000 to $90,000 in premiums you’re not covered,” he told the newspaper.

Mr Hall says following the 2011 Brisbane floods insurance policies now have a standard flood definition, but accepts that price can be a problem.

“Insurance prices risk, and that means that for those in flood-prone locations, particularly small businesses, flood cover can be costly,” he said.

“That is why the ICA has called on all Australian governments to do more to protect homes, businesses, and communities from the impacts of extreme weather.

“With appropriate mitigation infrastructure and household-level programs, property can be better protected and premiums can decrease, but this can only be achieved if governments act with urgency.”

S&P says the global reinsurance market will largely bear Australian insurers’ rising exposure.

“The ongoing extreme rainfall and flooding is looking to be a $1 billion-plus insurance event,” it said.

“This exposure could increase to $2 billion with ongoing Brisbane River inundation in urban areas and as the storm cell moves further into NSW.

“This would place the insurance exposure alongside that of Australia's largest flood events.”

Insurers are well protected by reinsurance, S&P says, but there will still be a significant impact.

“While gross exposure from the floods will be comfortably within reinsurance limits, insurers’ retentions will be moderate and eat into nominated catastrophe allowances and mute bottom line earnings.”

For Suncorp the net loss from this event will be $75 million and for IAG it will be $95 million, which is “in the order of 10% of normalised earnings for the year”.

“Should the flooding extend in duration or further over state boundaries, or breach aggregate covers, this may entail further event retentions to be absorbed by the primary insurers,” S&P says.

“There will also be rising pressure on reinsurance rates at renewal.”

“Also, reserving for repairs and replacement will come at a time of high claims inflation.”