The Insurance Council of Australia (ICA) has declared an insurance catastrophe for regions of Victoria, Tasmania and NSW impacted by flooding since October 12.

ICA said today insurers have so far received 7152 related claims across the three states, up 13% from a day earlier. The catastrophe classification activates priority services and support for affected homeowners and businesses.

“Together the insurance industry stands ready to help, working in conjunction with emergency services and government,” ICA said. “Insurance claims from the impacted communities will be prioritised.”

The declaration escalates an earlier "significant event” classification, and reflects the “growing severity of the floods and forecast further extreme weather,” ICA says. Thousands of homes and businesses are at risk.

ICA CEO Andrew Hall says the severity of rainfall continues to impact river systems that are already “beyond capacity”.

"The ground is soaked and there is nowhere for the flood waters to go,” he said.

After a sunny respite in recent days, the Bureau of Meteorology says widespread rain and thunderstorms will hit eastern Australia into early next week, from northern Queensland into NSW, northern Victoria and eastern SA.

Flood watches are current for SA, Queensland and NSW as forecast rainfall may lead to flash and riverine flooding as well as renewed river level rises for some already flooded catchments, the bureau says.

Some areas already flood affected may be impacted as thunderstorms spread further south into Victoria and Tasmania on Friday, as well as further east towards the Queensland and NSW coasts, including the northern rivers area. A cold front on Sunday will bring another burst of storms across much of southeast Australia.

Major Flood Warnings are current for the Avoca, Loddon, Goulburn and Murray rivers in Victoria, and for the Barwon, Darling, Macquarie, Lachlan, Murrumbidgee, Murray and Bogan rivers in NSW.

In Tasmania, the bureau’s senior meteorologist Jonathan How says widespread flooding was likely, with falls expected to reach up to 90 millimetres across the northern half of the state, and 220 millimetres possible about higher ground. Major flooding is a possibility at some locations, he said.

Mr Hall says the insurance industry is "dealing with an absolute avalanche at the moment of flood claims across the east coast of Australia,” with more than 230,000 claims lodged since February, and insurers paying out more than $5.3 billion so far this year.

"Inundation can take a long time," he told ABC news. "The system is at peak capacity, we ask people to be patient, we'll work through these claims as quickly as possible."

In areas of Australia, houses had been built “that should never have been built,” he said, calling for at least a billion dollars a year more to be invested in flood levees and raising homes and "ultimately going back and fixing past mistakes.”

"We need to make sure moving forward that development isn't approved in areas that are prone to flood,” Mr Hall said.