General insurers take on their customers' risk, turning them into a policyholders, allowing them to manage the financial burden of damage resulting from a specific event such as a flood, cyclone, theft, fire, storm or earthquake. 

Insurers identify and then manage the costs of these risks to make sure there is enough money coming in through premium payments to meet the cost of future claims as they arise.

Broadly speaking, general insurance in Australia is risk-rated.

In a risk rated insurance market, an insurer calculates the premium payable on the basis of various factors specific to an individual property, such as the likely frequency and size of a claim and the estimated value of such claims during the term of an insurance policy.

Having incorrect, incomplete or outdated hazard data may lead to less precise insurance premium calculations.

Having no hazard data can also lead to incorrect assumptions being made about a properties exposure, as insurers in Australia are required to operate within a conservative prudential framework.