A Treasury-backed submission to the Natural Disaster Insurance Review has called on the panel to recommend automatic flood cover as the preferred option for increasing overall coverage.

The submission is written by consultant Chris Connolly and involved consumer groups such as Choice, the Brotherhood of St Laurence, Legal Aid, the Salvation Army and Consumer Action Law Centre.

It says the current levels of flood cover, with some improvements to flood mapping and a uniform definition of key terms, has been rejected by the consumer groups. Instead they want automatic flood cover on all home insurance policies.

They argue this would eliminate any disputes about the difference between flood and storm damage.

“This option has many positive aspects and has the support of consumer representatives,” the submission says.

“Consumer representatives believe that the key objective of any reforms in the natural disaster insurance sector should be to increase flood coverage.

“This option will boost the overall level of flood cover.”

The groups also support the option of automatic flood cover with consumers having the ability to decline it.

But they say more work will be needed on funding models for automatic flood cover to make it more affordable.

They are concerned the proposal for a central flood insurance pool has not been looked at from the consumer perspective as it is seems to be complex.

The groups argue simpler funding models should be looked at, such as a focusing on only the small number of properties facing extreme risk.

“A model that concentrated on that category of houses might be able to deliver improvements in flood mitigation and more resilient buildings – and take some of the price pressure off flood insurance in the rest of the market,” the submission says.

“The establishment of a premium discount scheme linked to mitigation and remedial work could rely on the existing insurance and reinsurance market, rather than requiring the establishment of a new pool that would have to take on some flood risk.”

The consumer groups argue the review panel should consider a more limited role for a central body.

This would restrict its role to setting discount levels, establishing risk mitigation criteria and calculating and collecting subsidies from organisations that will benefit from the increased insurance coverage and risk mitigation.

“Ideally, the central body should not need to take on any risk or play any role in setting premiums,” the submission says.

“The panel should avoid any funding models that will lead to confusion, complexity or delays for consumers.”