Flood modelling revisions by IAG are causing subsidiary brand Coles Insurance to cease providing cover for some home policy customers in high-risk locations.

IAG sets premiums and risk ratings for all Coles Home policies, with premiums assessed on an individual property level taking into consideration factors such as claims history, location and exposure to natural disasters.

“As part of a general update of flood modelling by IAG across its home insurance products, flood risks for some local areas have been changed,” a spokeswoman told insuranceNEWS.com.au.

“In a small number of cases, the updated flood risk profile for a property is such that IAG is no longer able to offer coverage.”

In those cases policyholders are being contacted before renewal over the phone by a consultant explaining the changes and the next steps if they wish to have their flood risk reviewed.

The changes have applied specifically to the Coles policy and reflect in-house modelling by the underwriter.

The changes reflect more targeted underwriting across home policies by insurers, which can mean some homeowners benefit from falling premiums as their risks are revised downward, while others may experience higher rates or in some cases a withdrawal of capacity.

Improved flood mapping and modelling also provide an opportunity for local governments to make better decision on land-use planning and longer-term projects.

The Coles changes were highlighted by a newspaper story today quoting a Waterside Estate resident in western Sydney who had been told he could no longer gain cover because the property was in a high-risk flood zone.

Flood risks in the region west of Sydney are also set to be examined by insurers following the release of data from the NSW Government’s Hawkesbury-Nepean Valley Regional Flood Study initiative.