Australian households are enduring sharp increases in insurance premiums but market concentration and a lack of competition is only part of the story.
Federal Opposition Leader Peter Dutton has hinted at powers to break up major insurance companies to bring down premiums, in line with an existing coalition pledge to introduce "last-resort" divesture laws for the duopoly-dominated supermarket sector.
However, the body representing the insurance industry argues worsening extreme weather and natural disasters are largely to blame for higher insurance premiums.
"The problem comes down to where a property is often located, and the risks around that property," Insurance Council of Australia chief executive officer Andrew Hall told ABC Radio on Monday.
"And as the risks increase, the numbers of insurers who have the capital available to cover those risks decrease."
Mr Hall said spending on resilience and risk reduction was the most effective way governments could take pressure off insurance costs.
"I wish it was as simple as divestiture. There is not a silver bullet here," he said.
The Australia Institute executive director Richard Denniss supported regulations to break up insurance companies but said climate change was largely to blame for higher prices.
"Market concentration is part of the problem, but a much bigger part is the cost of climate change," he told AAP.
"(Peter Dutton) is right to raise it, but it's a distraction."
Mr Denniss said insurance companies would opt out of coverage entirely as storms became bigger and floods became more frequent.
"That's because that's how insurance works - you can't insure against likely events," he said.
On Monday, Mr Dutton reiterated his firm stance against the insurance industry, highlighting the pressures facing households and small businesses in the fire-ravaged Grampians region of Victoria and flood-hit north Queensland.
"If we have a situation where people are being priced out of insurance, or they're deemed an uninsurable risk when they shouldn't be, that is a failure of the market and we'll respond accordingly to that," he told reporters on Monday.
It is unclear if divesture powers for the insurance sector are a formal coalition policy.
Nationals leader David Littleproud suggested Mr Dutton was expressing his determination to pull all levers at his disposal to ease cost-of-living pressures.
"It would be unfair to say that that was a policy announced by Peter Dutton," Mr Littleproud told ABC Radio on Monday.
Asked if divesture powers would lower costs for insurance consumers, Treasurer Jim Chalmers took aim at inconsistencies in the coalition's stance.
"Peter Dutton's so-called policy has already fallen down in the heap, just like his free lunches policy has as well," he told reporters on Monday.
The Labor government has previously opposed the coalition's supermarket-specific proposal, arguing it would be ineffective when the only viable buyers were other supermarkets.
In an inquiry into price-gouging, Australian Competition and Consumer Commission chair Allan Fels recommended introducing divestiture laws for situations in which big companies were found to have seriously breached consumer law and breaking them up was deemed the best remedy.
