Allianz says last year’s catastrophic floods have sparked the insurer to examine whether it is viable to continue offering optional flood cover in its home insurance product.

Since 2012 the insurer has provided home customers with a choice to opt in or out of flood cover, a spokesperson says.

Under the current arrangement “homeowners with a high flood risk could still afford a home insurance product that protected them from all the other natural perils and losses that might befall them,” says the spokesperson.

“However, the events of last year have called into question the sustainability of maintaining such a model for optional flood cover,” the spokesperson told insuranceNEWS.com.au.

“As a result, Allianz is reviewing its optional home insurance flood cover product.”

The spokesperson cites an example of Allianz having incurred “significant” costs from emergency and temporary accommodation payments from last year’s flood catastrophes.

The temporary accommodation payments were due to delays caused by a significant backlog of hydrology reports for customers who had chosen not to take out flood cover.

“As a result, significant claim payments were made to policyholders that didn’t have flood cover and, hence, had made no premium contribution to their flood-related payments,” says the spokesperson.

IAG-owned NRMA Insurance made changes to its home cover policy a few years ago, grouping flood, rainwater run-off and storm surge so that customers are automatically insured for the three groundwater impacts. The changes mean a customer cannot opt out of flood without also removing cover for rainwater run-off and storm surge.

Another IAG-backed insurer, RACV Insurance, also groups rainwater run-off, flood and storm surge together. The RACV Insurance home building policy key facts sheet says a customer may be eligible to remove flood cover but doing so means cover for rainwater run-off and storm surge will also be dropped.

Suncorp-owned AAMI website says customers whose homes are located in higher flood risk areas have the choice to opt out of flood cover.