Insurers are expected to pass on to policyholders the "hundreds of millions of dollars" they will save from government funding for for the bushfire recovery effort, which the federal and NSW governments have agreed to fund on a 50-50 basis.

Insurance company IAG, which has received 9200 bushfire claims since September 2019, said the two governments' decision to foot the clean-up bill meant that individuals could use their "whole sum insured" on recovering their home or business.