The Federal Government should help drive the abolition of state insurance taxes to ease affordability concerns and increase policy coverage, a Senate committee says.

The Environment and Communications References Committee warns climate change is likely to increase the frequency and intensity of extreme weather events in coming decades, and non-insurance and underinsurance are significant problems.

It recommends “disincentives to insurance, such as taxes and levies applied by the states and territories, should be removed as part of a national reform process”.

The senators note the lost revenue will hit state and territory budgets. Therefore “such reform may best be achieved nationally with Commonwealth Government involvement through a Council of Australian Governments reform process”.

The report follows criticism of insurance levies in the 2010 Henry tax review and a recent Productivity Commission report labelling them a barrier to climate change adaptation that should be phased out.

The Federal Government has agreed in principle with the Productivity Commission but says the taxes are a “state and territory government responsibility”.

The Senate committee’s 10 recommendations also include ensuring reliable flood mapping and other data is available to landowners and planners. It also says building codes should incorporate mitigation measures against foreseeable risks from extreme weather events.

IAG CEO Mike Wilkins welcomes the recommendations. “This report is another voice that strongly says we need a comprehensive and more sustainable approach to managing natural disasters in Australia to keep people safe.”