Any plan for dealing with floods needs to tackle issues that are broader than property insurance, according to the Institute of Actuaries of Australia (IAA).

The IAA has called for a national solution to managing floods and the Chairman of its general insurance practice committee Peter McCarthy says this must start with an agreed policy goal.

“For example, is the objective to fully compensate everyone affected for their losses or to partially compensate a proportion of those affected?”

Mr McCarthy says previous attempts to deal with flood insurance have failed to bring all parties together properly and for many years flood has been “out of sight, out of mind or too hard”.

He hopes that the Queensland events and Commission of Inquiry will lead to a “road map” to a solution and says the debate must involve governments, insurers and consumers.

Although the IAA sees the expense of flood insurance and inadequate coverage as key issues, Mr McCarthy says it wants a wider discussion on the extent of cover, flood mapping and the cost and affordability of managing floods.

“The issues are very complex and all interact,” he said.

Apart from defining flooding, Mr McCarthy says there also needs to be discussion on what property will be covered and to what limits.

“Will there be compulsory cover? Will private residences and commercial properties be covered? Will government infrastructure be covered?”

The IAA wants to see a realistic assessment of whether it is affordable to implement a solution over the long term. Mr McCarthy says this should cover whether this could be funded by taxes, a levy or premiums, the level of compulsion and the cost of reinstating damaged assets.

Options must address cross-subsidies from property owners who are not in flood-prone areas, and whether this will encourage risky behaviour from those who are, as well as what relief should be provided to people who have no insurance or who are underinsured.