IAG CEO Mike Wilkins has condemned calls for insurers to pay flood claims that were not covered by policies.

“Kneejerk calls for insurers to pay for an event for which they had not been collecting premiums were reckless,” he told a Committee for Economic Development of Australia event in Sydney.

“Uncovered payouts would drain the Australian insurance industry of billions of dollars, presenting a solvency issue and endangering the cover of the millions of other Australians who pay premiums for other risks like bushfire or hail.”

Mr Wilkins defended insurers which don’t offer flood cover as standard, arguing not all water damage is the same.

He says while insurers can measure the risks of flash flooding because the damage is more evenly spread and therefore covered by a larger insurance pool, riverine flooding is different.

“Riverine flood – caused by water rising out of a river or body of water bursting its banks, often quite some time after the rain has stopped – is a certainty that affects less than 3% of all properties in Australia,” he said.

“In some locations – on floodplains or around watercourses – such riverine flooding is not a risk; it is a guaranteed event every few years.  

“You can see why it is so important for insurers to have detailed riverine flood mapping and data – including information on the depth of floodwaters for different events – before they can accurately price a product in a way that is fair to all customers.”

Mr Wilkins says this data has largely been unavailable in Queensland, despite the industry seeking access to it for many years. 

“For more than 90% of Queensland catchments little or no data is made available,” Mr Wilkins said. 

“While some local governments have been proactive and forthcoming with the data, unfortunately there are many that simply do not have it and others who have not been willing to provide it.”  

He says IAG will offer national flood cover when sufficient data is available.

“This commitment is borne out by the fact that we already do provide flood cover in states where this information has been made available – such as NSW.”