The delegation of Australian insurance leaders and Assistant Treasurer Stephen Jones has returned from London and Munich with a clear message from leading reinsurers.

The delegation included ICA President Nick Hawkins (IAG CEO) and CEO Andrew Hall, and board members Sue Houghton (QBE Australia Pacific CEO) and Steve Johnston (Suncorp CEO).

Meetings were held with Lloyd’s, the UK flood pool Flood Re, and leading reinsurers and reinsurance brokers.

Mr Jones told the AFR newspaper that he’s “more convinced than ever that the sensible and enduring interventions are all aimed at reducing the underlying risk, instead of masking it or pretending that it doesn’t exist”. He added that a flood reinsurance pool is “not the first place I’d go, to be honest”.

And he told the ABC that reinsurers had a very clear message.

“I really wanted to find out the things that the government could do to make a difference, to help households. And simply, they said, the worst thing you can do is subsidies. The best thing you can do is look at mitigation.

“And from a government point of view, that means better infrastructure, but it also means stop doing dumb things like building the wrong houses in the wrong places.”

The Federal Government has pledged $1 billion over five years to invest in disaster mitigation projects, matched by states and territories.

Consumer groups also back mitigation, but make the point that it may take decades to make homes more resilient or move them out of harm’s way.

They say, in the meantime, direct subsidies to the most vulnerable should play a role. It’s a strategy also flagged by an Actuaries Institute report earlier this year.

“Of course we understand that risk needs to be reduced and we need to think about mitigation,” Financial Rights Legal Centre Senior Policy and Communications Officer Julia Davis tells insuranceNEWS.com.au.

“But direct subsidies can help people through this transition while we reduce the risk. Of course it doesn’t make sense for us to subsidise $40,000 insurance premiums for ever and ever. But you can have subsidies be a tool to get people over the hump while we retrofit old homes or relocate whole towns.”

Ms Davis expects the Government's inquiry into insurers' response to last year's floods to also address home insurance affordability issues.