Storm damage, hail and flooding caused 70 per cent of all insurance losses in NSW between 1970 and 2013, a report by insurance giant IAG and consultancy firm SGS Economics and Planning shows. Insurance losses from hail damage in that period were nine times more than bushfire losses in the state.

The report warns that Sydney has a "high risk" of floods relative to other regions. That is due mainly to extensive urban development in the flood plains of the Hawkesbury, Georges and Cooks rivers along with their various tributaries.

Storms and flooding regularly cause disruption to urban transport networks, affecting work patterns and economic activity. Heavy rainfall also impacts road networks by reducing travelling speeds and increasing accident rates.

"Twenty-four hours of disruption to transport networks in a Sydney or Melbourne CBD could reduce GDP by $30 million, much of which could not be recovered," the report said.

SGS Economics and Planning economist and the report's author, Terry Rawnsley, said the economic interruptions caused by heavy rainfall and localised flooding in cities are often underestimated.

"Storms sometimes don't cause durable losses but they disrupt the whole city because the transport infrastructure can't handle it," he said.

"These weather events happen quite often but they don't get the same publicity as a bushfire that destroys some houses."

Half a million workers in and around Sydney's CBD "have experienced transport disruptions caused by storms in recent years", the report said.

Hawkesbury is the most disaster-prone region of greater Sydney, ranking among the city's highest risk council areas for flood, storm and bushfire. It was among 10 council areas identified as having a "high" or "very high" risk of major flooding, including Camden, Fairfield, Rockdale and Woollahra.

The report said bushfires pose a "medium" disaster risk to greater Sydney. But three council areas - Blue Mountains, Gosford and Hawkesbury – have a "high" risk from bushfire.

More than 28 per cent of Australia's gross domestic product and nearly a quarter the population live in areas with high to extreme risk of flooding. About one-fifth of the nation's economic output (or $326.6 billion worth of GDP) and 3.9 million people are located in areas with high to extreme risk of tropical cyclone.

The report, entitled At what cost? Mapping where natural perils impact economic growth and communities, calls for greater emphasis on disaster prevention in Australia.

Spending on mitigation initiatives by governments represents around 3 per cent of what is spent on post-disaster efforts. As a rule, one dollar spent on mitigation can be seen to save at least two dollars in recovery costs.

"Governments have tended to over-invest in post-disaster reconstruction and under-invest in mitigation that would limit the impact of natural disasters," Mr Rawnsley said.

As the population increases governments will come under added pressure to release more land for development in high-risk locations.

"Development of high risk land should be informed by accurate data on natural peril risk and be accompanied by appropriate mitigation measures to minimise the risks," the report said.