Analysts are predicting large losses for insurers from the Victorian bushfires, and say it could lead to further premium increases for people living in bushfire-prone areas.

KPMG Head of Insurance Brian Greig told insuranceNEWS.com.au insurers always try to ensure risks are appropriately priced, and if they assess that bushfire risks are increasing they may reassess premiums in those areas.

But he says it’s important to note that there is a lot more flexibility in policies now in terms of policyholders being able to adjust their excesses and take on more of the risk themselves.

“They could find that their overall premium goes down,” he said. “That sort of flexibility and premium pricing is becoming more of the norm these days.”

Mr Greig says it is not only the catastrophe events that insurers have been faced with – poor investment performance has also impacted their results.

“They just can’t go back to policyholders to try to recoup investment losses,” he said. “It’s more that they’re trying to reprice the business on a go-forward basis.”

IAG’s RACV and CGU brands and Suncorp’s AAMI and GIO are likely to be the two most affected insurers.

But Mr Greig says both insurers have good reinsurance coverage after adjusting the caps on their claims for any single catastrophic event.