Treasury has held meetings with key stakeholders on standard definitions and the standard cover regime, as it moves ahead with work on the issue in line with action flagged in the Federal Budget last October.

“Treasury has conducted targeted stakeholder meetings seeking views on which natural hazard definitions are most in need of standardisation and how the standard cover regime could be changed to ensure it is fit-for-purpose,” a spokesperson told insuranceNEWS.com.au.

“It is expected that additional public consultation will take place in due course.”

Assistant Treasurer and Financial Services Minister Stephen Jones last year outlined measures aimed at improving insurance affordability, and said the Government would develop standard definitions for certain natural hazards and review the standard cover regime to improve consumer understanding.

The Insurance Council of Australia (ICA) says it’s aware of the interest in standardised definitions across a number of product classes.

A spokesperson says ICA has been working constructively with the Federal Government and other stakeholders throughout the process.

“We are mindful that standardisation across definitions may not solve coverage issues on its own, and needs to be considered in light of competition compliance requirements,” the spokesperson said.

A standard definition for flood was introduced in 2012 after severe weather and heavy rainfall caused the inundation of homes in Brisbane and other communities in the eastern states in 2010-11.

Consumer groups say in a report released last month that the flood definition reduced confusion, but “has allowed insurers to adopt an inconsistent approach to many other terms - including terms that define damage that may be associated with a flood, such as damage from storm water and runoff”.

The report, Weathering the Storm: Insurance in a changing climate, says consumers need simple and standardised definitions to be able to meaningfully compare home and contents products and understand what the policy they choose covers.

“Stakeholders interviewed for this report noted that complex and diverse policy terms and definitions can contribute to unintentional underinsurance,” it said.

The groups suggest terms that would benefit from greater consistency and clarity include maintenance, wear and tear, bushfire and smoke damage, rainwater/stormwater and runoff, tidal surge/acts of the sea, malicious damage and temporary accommodation.