Analysts say the financial impact of Cyclone Yasi on an already embattled Queensland will be severe and long lasting, with insurance premiums set to be immediately affected.

Just weeks after flash floods swept through the state and claimed more than 20 lives, Cyclone Yasi ripped through far north Queensland last night, devastating a multitude of towns.

It was originally thought the area between Cairns and Townsville would take the brunt of the category five cyclone, but Queensland Premier Anna Bligh said the smaller towns of Mission Beach, Tully and Innisfail are among the worst hit.

“At this stage, there are no reports of any serious injuries or fatalities… [But] it’s far too early yet to start talking about dodging bullets,” Bligh said.

At 7am this morning, the Bureau of Meterology downgraded Yasi to a category two cyclone but says it remains destructive, with wind gusts of more than 125km per hour and heavy rain.

Bligh said the town of Tully, home to just 3,500 residents, has been hit head on, with 90% of the main street “extensively damaged”.

Cairns Mayor Val Schier says the relatively unscathed city will be open for business very soon, although restoring power is a priority. 175,000 people throughout the state are without power after the cyclone hit major transmission lines.

Shares in Brisbane-based insurer Suncorp have already fallen more than 1.5% despite its best efforts to reassure investors, while Insurance Australia Group shares have fallen more than 2%.

Meanwhile, reinsurance company Swiss Re says Australia has become a riskier place to do business due to the string of major natural disasters over the last two years.

The comments may serve as the basis for an increase in the premiums that global reinsurance companies charge local underwriters, such as Suncorp or Insurance Australia, to protect them from the cost of insuring against large floods, fires and storms.

As reinsurance represents one of the biggest single costs for insurers, any increase in rates is likely to be felt by homeowners and businesses.

Even without taking into account the $1.5 billion damages bill from floods, Australia and New Zealand combined have three of the world’s top 10 most expensive catastrophes – the hailstorms in Melbourne and Perth, and the earthquake in Christchurch.

Mark Senkevics, Swiss Re head for Australia and New Zealand, says it is likely the recent string of natural disasters will affect risk ratings.