Affordability is the major issue facing flood insurance following the Federal Government’s swift response to the Natural Disaster Insurance Review (NDIR) report, the review’s chairman says.

NDIR Panel Chairman John Trowbridge says the Government’s commitment to provide $12 million to set up a flood risk information portal and improved nationwide flood-mapping data is a “major step forward” in dealing with insurers’ reluctance to offer flood cover.

“That addresses the issue of availability,” he told insuranceNEWS.com.au. “But at this stage the issues around affordability haven’t been addressed.

“I expect these will be discussed during consultations with the insurance industry and other interested parties next year.”

The NDIR panel – Mr Trowbridge, TAL CEO Jim Minto and leading plaintiff lawyer John Berrill – has called for home and contents policies to offer flood cover as a compulsory feature, with discounts on home and contents premiums for properties in high flood-risk areas ensuring such properties are not “priced out of the market” with high premiums.

It also calls for government guarantees for flood claims from a reinsurance pool.

Informed sources have told insuranceNEWS.com.au the Federal Government will be cautious in moving on the “major ticket” items in the review without first having a clear idea of the size of the exposures it could face.

“The floods in Queensland and Victoria have shown just how expensive it can get,” one source said.

Mr Trowbridge says most developed countries have some kind of government-supported flood insurance scheme. “It’s probably the only way that you can effectively deal with parts of the risk that the private sector can’t handle on its own.”

The Government has called for comments on the NDIR report after releasing the report a week ago. While some of the 47 recommendations have already been addressed, consultations on the major points related to the discount and reinsurance pool plan will be held next year.

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