Insurance giant IAG's chief executive Peter Harmer has warned some homeowners in bushfire-prone areas could be priced out of insurance cover because of the rising costs of premiums following the unprecedented summer of extreme weather.

IAG would not turn customers away, Mr Harmer said, but with the spike in claims pushing premiums up and rising labour costs, the price of insurance may become too high in certain areas.

"Some people may not be able to afford the insurance," he said, adding that cyclone and flood-prone areas of Far North Queensland and NSW were particularly at risk. "But bushfires are fairly indiscriminate."

IAG has called for greater action on climate change after the insurer's earnings took a massive hit due to severe weather events. Credit:Sean Davey

Net profit slumped 43.4 per cent to $283 million in the December half as extreme weather events took their toll, IAG said in its half-year results on Wednesday. Sales were up 5 per cent from the previous half at $9.01 billion.