Building code regulators detailed the impacts of potential construction standard changes and hydrologists were asked to explain their decision-making processes at today’s final hearing of the federal flood inquiry.

Australian Building Codes Board CEO Gary Rake told the inquiry committee that plans to add climate resilience as a provision in codes will require a “different way of thinking”. 

“With flooding, our focus is to make sure that a building didn’t suffer structural damage due to the pressures of moving water ... the aim of that is to make sure the person in the building is not hurt during this time,” Mr Rake said. 

“At the moment, our thinking does not consider whether the person will be able to move back in a week, a month, a year, or ever. It’s not that we did not want to think about that before, but the construct of our laws did not allow us.” 

He conceded there may be challenges around costs should standards change, with the code needing to prioritise low-cost, “no-regrets” solutions for homeowners. 

“One unintended outcome is that as we increase the standards for rebuilds to make homes more resilient for the future, we could be causing an increase in ... underinsurance for those who might not know that if they suffer a loss,” Mr Rake said.

“They would have to rebuild to a significantly higher standard and would have to take that into account in their insurance.” 

He said any code changes will not “retrospectively apply new standards to old buildings. Insurers shouldn’t be coming in and suggesting that property owners have failed by not upgrading to meet new standards, unless that was in their insurance contract, which I expect would be a big disclosure.”

Engineers Australia Sydney Water Engineering Panel member Chris Thomas rejected suggestions hydrologists may have been biased due to their insurer affiliations. 

“The approach taken is extremely forensic: we look at the gauge data, the rainfall data, we piece a story together and link it up with the anecdotal evidence reporting, which is really important,” he said. 

“The impartiality is driven by the line of questioning we put forward to those we interview. The degree of rigour [with which] we ask these questions is totally driven by the technical side of what is happening and not anything to do with whether you get a payout or not ... it doesn’t even come into the conversation.

“None of us want to be brought in front of [the Australian Financial Complaints Authority] and have our reports interrogated ... in my mind, we are extremely rigorous in terms of justification for the conclusions we arrive at.”

Mr Thomas said he has seen no instances of insurers not wanting to pay claims. 

“If the insurers don’t pay, then effectively, they lose market share and go out of business,” he said. “Our job for the insurer is to justify what payment can be made, so they can reinforce in the reinsurer’s mind that the claims it supports the insurer on are bona fide.”

Mr Thomas said “all kinds of improvements” should be made to simplify water damage claims. 

“There was meant to be a standardisation after the 2011 floods, as it was more complex then, but obviously today there is still some grey in certain policies in the eyes of the consumer. 

“When we interact with people at their kitchen tables, they believe they are covered by insurance ... we are under the impression that they are probably not and that their policy is not what they want to be.” 

Standards Australia COO Kareen Riley-Takos told the committee of MPs that insurers could choose an industry-imposed standardisation of definitions. 

“If the desire is there, and the insurance industry wants it, having an agreed Australian standard that has gone through a significant process of consultation and consensus, that is certainly possible,” she said.

“If self-regulation with a voluntary standard is not sufficient, mandating a standard for remediating works could be considered.”

Today’s hearing was the last session of the inquiry into insurers’ responses to the 2022 floods. A final report is due to be delivered by October 18.