Now they are beginning to feel the pinch from insurance premiums, with some insurers demanding sharply higher payments on the basis of perceived higher risks of coastal disasters.

This newspaper reports today the shock experienced by one resident whose premium for their property - low-lying but hardly seaside - has more than tripled from last year to $3600.

The insurance industry has warned that about 50 per cent of addresses and population in Australia are within seven kilometres of the shore and about six per cent are within three kilometres of the shore and less than five metres above sea level.

If pessimistic projections of sea-level rise are accepted, it seems clear that insurance for many properties will become either extremely expensive or unobtainable.

But even without a rise in sea levels, the insurance industry seems persuaded that extreme weather events are set to become more common. For coastal properties this may mean an increased risk of so-called storm surges, where storm-driven waves penetrate further onshore than usual.

In recent months owners of many Hunter properties have experienced similar premium hikes to the one reported today. These increases appear to have followed the destructive flash-flooding of the 2007 Queen's birthday long weekend, when urban stormwater systems were overwhelmed by a cyclonic downpour and many houses were inundated.

Many insurance companies may have been inclined to argue that this was flooding, not storm damage, and therefore not covered under typical policies. Under the circumstances, however, most paid up preferring to avoid political censure and bad publicity.

Since then, some companies have been automatically covering flood damage, leading to higher premiums for most householders, especially those in areas that were affected by the 2007 flash-floods.

The reason for these increases is understandable, but it is debatable whether it is fair to penalise particular addresses so harshly for what are, after all, very rare events. Such enormous increases seem likely to lead to more people dropping their cover or under-insuring. That can't be an acceptable result.