Just one day after hailstorms pummelled Sydney and the central coast, it is already the most expensive catastrophe for insurance companies this year.

Key points: Insurers will prioritise claims from the Sydney hailstorm after it was declared a "catastrophe"

Insurers will prioritise claims from the Sydney hailstorm after it was declared a "catastrophe" A catastrophe is declared when the damage bill is likely to be in the tens of millions of dollars or higher

A catastrophe is declared when the damage bill is likely to be in the tens of millions of dollars or higher Domestic and international flights are delayed at Sydney Airport, causing frustration for Christmas travellers

The Insurance Council of Australia (ICA) has declared the storm a catastrophe, with 25,000 claims already made and losses of more than $125 million.

Three-quarters of the claims made so far have been for damage to motor vehicles, including smashed windscreens, after parts of Sydney were pummelled by hail up to 8 centimetres wide.

Residents have also been ringing their insurers about damage to tiled or metal roofs and flooding.

Ferry passengers received a unique perspective of the storm. ( Facebook: Steve McIntyre )

ICA spokesman Campbell Fuller said the full financial impact of the storms would be significant.

"It won't be known for some days, or even several weeks," he said.

"It's a week before Christmas and the insurance industry wants to alleviate the stress being experienced by households and businesses hit by the storm.

"I encourage anyone who has suffered property damage to lodge a claim online with their insurer or contact their insurer's call centre as soon as possible."

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The ICA said it was the fifth catastrophe it had declared this year.

In March, bushfires in NSW and Victoria resulted in $82.5 million in insured losses.

In the same month, Cyclone Marcus caused $62 million in claims, with $16.8 million from floods in Queensland.

Storm and flood damage around Hobart in May resulted in $99.6 million in insured losses.

The State and Federal governments have also announced assistance to those affected by storms and flooding from December 20 onwards.

The assistance will help those in the Hornsby, Liverpool, Central Coast, Waverly, Woollahra, Tamworth, Lithgow and Dubbo local government areas who are uninsured, have damage to their homes and meet an assets and income test.

It will also help councils in affected areas with the cost of cleaning-up and restoring damaged public assets.

The Bureau of Meteorology said the storms pelted a widespread area with large hailstones.

Many areas looked as though they had been blanketed by snow.

Dozens of flights at Sydney Airport are now delayed or cancelled as a flow-on effect of the storm last night, and travellers have described the check-in process as "chaos".

A spokesman for the airport said there were delays at T1 (international) and T2 (domestic).

The delays at T2 are up to 60 minutes for some services and at T1, flights are running around 40 minutes behind.

The backlog of flights is largely due to the wild weather yesterday but also poor weather in Melbourne today, the spokesman said.

"If you're catching a flight out of Sydney today allow several hours because it's constipated as f**k," writer Benjamin Law tweeted.

Virgin Australia has advised passengers to allow 2.5 hours before their domestic flight as "it's incredibly busy".

Berowra one of the worst-hit areas

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Surfers at Bondi Beach had few options for shelter, and while many made a dash for the shore, some stuck it out in the water and used their boards for cover.

At Berowra, on the upper North Shore, there were reports of hail about 8 centimetres wide, while Cabramatta in the south-west and parts of Surry Hills received hail about half that size.

A State Emergency Service spokesperson said Berowra was one of the worst-hit areas, with "almost every second home" needing assistance.

"Giant hailstones, which is hail greater than 5 centimetres, are quite specifically driven in supercell thunderstorms," meteorologist Jordan Notara said.

"We do get them quite regularly over summer through NSW, but these storm cells redeveloped quite intensely over Sydney specifically."

The state's most highly populated area was right in the firing line, worsening the impact.

Mr Fuller said an "insurance catastrophe" was declared due to the extent of the damage, which was evident early in the storms.

"The declaration means insurers are prioritising claims from the hailstorm and they're endeavouring to help customers as quickly as possible," he said.

It also means a taskforce has been set up specifically to liaise with emergency services and government bodies.

While the cost of the storms will not be known for some time, Mr Fuller said a catastrophe was declared when the damage bill was likely to be in the tens of millions of dollars or higher.

The Insurance Council of Australia says most claims so far have been about vehicles. ( ABC News: Nick Dole )

How high could the damage bill get?

Sorry, this video has expired Storms swept across Sydney, with parts of the city battered by large hail.

Mr Fuller said hailstorms were often the biggest natural disasters that hit Australia each year.

One of the worst hailstorms to hit Sydney occurred in April 1999, when a cell began to brew in Nowra before striking the Harbour City.

There was significant hail pelting down in 85 suburbs, damaging around 63,000 cars and 22,000 insured buildings.

The ICA later placed the estimated insurance loss at $1.7 billion.

Mr Fuller said in today's terms, that would equate to $5.6 billion.

Brisbane was also hit by a huge "supercell" storm in November 2014, with about 15,000 hail-battered cars contributing a huge amount to the overall damage bill.

The estimated cost of that damage was over $1 billion.

At the time, the RACQ called the supercell "the largest single claims event" the state had ever seen, with more than 3,500 cars written off.