Hundreds of business owners in Townsville could face ruin after they chose not to take out flood cover prior to the devastating storms that hit the North Queensland city.

Industry sources told insuranceNEWS.com.au today that as many as three-quarters of businesses in the city are feared to have declined flood cover.

The reasons for such a large number of decisions to opt-out of flood cover are not yet clear, with some citing affordability and others claiming their broker did not offer flood cover to them.

Politicians are already ramping up pressure on the industry by warning against “tricky tactics”, but insurers are likely to resist pressure to pay where the policy does not respond.

While all policies generally include storm cover, commercial and domestic customers can decline flood cover.

The standard wording defines flood as “the covering of normally dry land by water that has escaped or been released from the normal confines of any lake, river, creek or natural watercourse, whether or not altered or modified, or any reservoir, canal or dam”.

An inquiry will be held into the Townsville floods, which saw a year’s rain fall in a few days, and it is expected to focus on a decision to release water from the Ross River Dam.

The Insurance Council of Australia (ICA) says so far there have been 15,455 claims from Townsville, equating to losses of $186 million.

It says it is concerned that “a significant number” of the city’s businesses opted out of flood cover.

“ICA believes most households chose to buy policies that cover them for flood, though some may have opted out,” spokesman Campbell Fuller told insuranceNEWS.com.au.

“However, though many Townsville businesses affected by the catastrophe did buy flood cover, ICA is concerned that a significant number chose not to purchase flood cover.

“We are collecting data to analyse the full impact of the floods on the city, its households and businesses.”

ICA says commercial flood cover has been available for Townsville businesses since 2007 and is sold by most large insurers.

It says it is seeking more information on why businesses and commercial property owners may not have bought policies that cover flood.

“Business owners can determine whether they need flood cover, and this generally forms part of the discussion that takes place with their broker,” Mr Fuller said.

“If a business believes it was not properly informed about flood cover at the time of purchase, the policyholder should take this up with their insurance broker.”

Doctor Michael Clements, whose medical practice was among many outlets inundated at the Fairfield Central shopping centre, told Guardian Australia his broker “did not mention” that flood wasn’t covered.

National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au he had only had “preliminary feedback” at this stage so did not wish to comment in detail on the issue, or on any individual cases.

“North Queensland is a difficult market because of the weather,” he said.

“The Australian Competition and Consumer Commission inquiry is primarily looking at domestic and strata, but there appear to be some issues in the commercial space as well.

“Brokers on the ground are working very hard at the moment – there is a massive amount of effort going in.”

Mr Booth says he has heard of one business where including flood cover doubled the premium.

“When that is the level of increase, affordability becomes an issue.”

ICA encourages businesses to lodge claims, whether or not they have flood cover, and typically an insurer will determine whether damage was caused by flood or storm through an independent hydrology process.

Meetings between the industry and Deputy Premier Jackie Trad are scheduled for 10.30am Queensland time tomorrow.

ICA is also holding insurance forums for policyholders on February 25 and March 25.

“Insurers are reassuring politicians that claims are being handled swiftly, compassionately and fairly,” Mr Fuller said.

“Insurers will do their best to help customers, whether householders or businesses, and claims will be settled responsibly in accordance with the policy that has been purchased.”