Assistant Treasurer Bill Shorten will chair a new “Insurance Reform Advisory Group” bringing together industry bodies and two key Federal Government ministries.

Mr Shorten said in Melbourne on Friday that the group will talk to peak industry bodies and have representatives from Treasury and the Attorney-General’s department as members.

“The new group will be an ongoing forum for the peak bodies representing industry and consumers to regularly exchange views with me and other Government representatives about issues in the insurance field that should be considered for reform – be it legislative change or changes to regulatory or industry practices,” he said.

“It will not seek to duplicate the work of various consultative groups on insurance issues run by the Australian Securities and Investments Commission or the Insurance Council.”

Mr Shorten says John Trowbridge will also join the group due to his work with the Natural Disaster Insurance Review.

Mr Trowbridge, a former actuary, insurance executive and recently retired member of the Australian Prudential Regulation Authority executive board, already chairs the review panel appointed by Mr Shorten to examine how the risk and cost of natural disasters can be shared equitably.

One area the review panel is looking at is a national reinsurance pool similar to the one created in 2003 to provide commercial properties with cover against terrorist attack. Mr Shorten doesn’t expect the new reform group will be examining this issue.

“Whether a scheme such as the Terrorism Reinsurance Pool scheme is appropriate for addressing issues of affordability and availability in the market for natural disaster insurance is a question that will be considered by the Natural Disaster Insurance Review,” Mr Shorten said.

“I should certainly not be taken to be ruling out such a response.”

He says the review will be guided by the principle that government intervention in private insurance markets “is justifiable only where there is clear failure by those private markets to offer appropriate cover at affordable premiums”.

In an exclusive interview with sister publication Insurance News (the magazine), Mr Shorten says he is concentrating on having a “functioning private market for insurance combined with good public policy”.

The interview in the magazine’s April/May edition was conducted a few days before the minister announced a proposed standard definition of flood. He told Insurance News the industry and successive governments have been debating the impact of natural disasters like floods since the time of Cyclone Tracy in 1974.

“A lot’s happened since then, but the definition of ‘flood’ remains in the too-hard basket.”