Wesfarmers Insurance says that the current government review into flood insurance has failed to address rural and regional issues.

In its submission to the Natural Disaster Insurance Review (NDIR) – one of more than 70 received – Wesfarmers Insurance says that while it supports the Insurance Council of Australia’s (ICA) position opposing mandatory flood insurance, “both the NDIR issues paper and the ICA submission fail to acknowledge that the flood issues are exacerbated in the rural and regional market”.

Wesfarmers’ submission puts the emphasis on the importance of improved flood mapping, rather than mitigation.

It says that a “lack of flood-mapping data and unique issues associated with the built environment on rural properties” are the “key challenges” in providing flood cover to rural Australia.

“If the release of national publicly available flood mapping is not aligned with changes introduced as a result of the NDIR review, then this lack of data could possibly result in the withdrawal of insurers from the property insurance market,” Wesfarmers Insurance warns.

It says mitigation is expensive and could encourage inappropriate development in rural and regional areas. Planning and development controls are the “most important” measure to control flood risk in the bush.

In their submissions to the NDIR, both Suncorp and IAG reject proposals to impose mandatory flood cover on all policyholders which Suncorp says is “just short of nationalising home insurance”.

Both insurers support the ICA plan to provide rebates on flood premiums to high-risk homes funded via existing state government insurance taxes.

Suncorp says any such mechanism should be as “light touch” as possible, with restrictions on eligibility and a scaling back of the subsidies over time.

“The funding of discounts should align with those responsible for the mitigation and reduction of risk, namely local councils and state governments,” Suncorp says.

IAG agrees that any subsidy “should be funded by those who are responsible for the management of environmental hazards and planning of the built environment”, must be limited to discourage further development in flood-prone areas and provide a targeted incentive to increase spending on mitigation.

“A levy based on local government rates, supplemented by the Federal Government, would meet this requirement and provide an incentive for all levels of government to mitigate risks and reduce the subsidy over the longer term,” IAG says, pointing out that “there will be a benefit to government in that funding otherwise spent on emergency recovery is likely to be reduced”.

Suncorp also calls for a national inquiry into disaster mitigation and infrastructure adequacy, and for a “comprehensive analysis of insurance affordability” to be undertaken by the Productivity Commission before the NDIR review moves forward.

QBE has not publicly released its NDIR submission, but a spokesman says it “supports ICA’s submission and continues to be heavily involved with the NDIR as a member of ICA”.