The Insurance Council of Australia (ICA) is dead against it, but that hasn’t stopped giant broker Marsh calling on the Federal Government to consider introducing a flood reinsurance pool similar to the successful terrorism reinsurance pool.

Marsh CEO John Clayton says a reinsurance pool could provide protection to insurers for catastrophic risks such as flood.

ICA told insuranceNEWS.com.au last month it sees “no merit” in such an arrangement, saying the industry already has a highly efficient and competitive market and that consumers simply have to “shop around” to find the right product.

But Mr Clayton says it’s clear the industry hasn’t been able to develop a solution – a problem he says has existed for decades.

“A solution for policyholders needs to be found,” he said. “Insurance pooling arrangements work well for other risks and could provide better protection against flood losses in the future.”

He says a flood pool could be funded by a combination of reinsurance premiums supported by a government guarantee and supplemented by its own reinsurance program.

“Feasibility analysis would be required to determine the precise settings of such a pool, but we see the potential,” Mr Clayton said.

However, a spokesman for Assistant Treasurer Bill Shorten says in the “ordinary course of things” the Federal Government can deal with cost from disasters such as floods through its natural disaster arrangements.

“What’s different this time is just the sheer size, scale and economic cost,” he told insuranceNEWS.com.au. “That’s why special arrangements like the one-off flood levy has been constructed.

“Our message to parliamentarians who will gather in Canberra this week is that passing the Government’s [flood levy] package is an urgent task.”