Insurers and the Insurance Council of Australia (ICA) contend that any plan to provide insurance assistance to houses at high risk of flooding should not be extended to small businesses facing flood risks.

In its submission to the Natural Disaster Insurance Review (NDIR), ICA says it “does not support the extension of premium support to commercial classes of insurance”.

It adds that mandating cover for commercial insurance would increase the price of cover for all businesses, resulting in higher levels of underinsurance and non-insurance.

Suncorp says any form of mandatory or opt-out flood insurance should not be expanded to include small businesses, as cover for that segment needs to be individualised and it would increase insurance costs for all small business operators when only a small percentage face a flood risk.

IAG says that because of the involvement of brokers, businesses have access to specialised advice and are more likely to buy a policy aligned to their needs.

Because very small businesses are less likely to use a broker, IAG’s submission suggests “this group would benefit from automatic inclusion of flood within policies in the same way homeowners would”.

But the insurer concludes that including flood as standard in all small business policies may result in many opting not to buy insurance at all.

While the focus of the NDIR is primarily on residential properties, its terms of reference also address small business.

However, review Chairman John Trowbridge told a recent seminar that many businesses which suffered a loss in the summer floods didn’t own the premises, making the availability of flood cover for small businesses a lesser issue.

But Mr Trowbridge says damage to business contents and the scope of cover offered through business interruption policies require further investigation.