The Federal Government is expected to reveal its standard flood definition “very soon” following industry agreement on a definition, the Insurance Council of Australia (ICA) has told insuranceNEWS.com.au.

ICA GM Risk and Disaster Planning Karl Sullivan says the industry “has agreed to a standard definition on flood, [and] we’re just waiting for Government action on that”.

He says the form of words settled on by the industry, for use in all household insurance policies, are those featured in ICA’s submission to the Government’s consultation paper on the issue.

The industry preferred wording is: “Flood means the covering of normally dry land by water that has escaped or been released from the normal confines of: (a) any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or (b) any reservoir, canal, dam, or other water channel or waterway whether altered, modified or purpose-built.”

This wording is slightly altered from that which Treasury originally proposed in its consultation paper, to take into account flooding from stormwater channels.

Mr Sullivan says he expects the amended definition is “the one more likely to be preferred by Government” but adds that the definition originally proposed is seen by the industry as “sufficient”.

The definition will restrict the use of the terms “flood” and “flooding” in home policies to the standardised definition.

Mr Sullivan says the industry is now awaiting an announcement from the Government, with legislation likely to be introduced in spring and the standard definition to be enshrined in the Insurance Contracts Act.

Last week Assistant Treasurer Bill Shorten said figures for disputed claims from the Queensland floods reinforce the need for a standard flood definition.

“I therefore repeat my calls on the insurance industry to continue to work with the Gillard Government to deliver a standard definition of flood to ensure policyholders know where they stand and have confidence in the insurance product they are purchasing,” he said.

[See article, Regulatory & Government section]