The Federal Government’s approach to making flood insurance more affordable will be revealed before the middle of the year, according to Financial Services Minister Bill Shorten.

Reforms following the Natural Disaster Insurance Review (NDIR) in 2011 – such as the standard flood definition – have largely addressed the issue of accessibility, but affordability remains a problem.

The matter has re-emerged following the recent floods in Queensland and northern NSW, with calls for government-backed premium subsidies for the most at-risk properties and complaints from policyholders about premiums rising because they cannot opt out of flood cover.

The NDIR raised both issues in its November 2011 report. A consultation paper was then released by the Government to consider making flood cover a mandatory offering by insurers, while giving consumers the right to opt out.

That consultation closed in March last year but a final report was never released.

The opt-out consultation was supposed to be followed last year by an issues paper on the NDIR recommendation for a system of premium discounts backed by a reinsurance pool for high-risk properties. But this also failed to materialise.

Insiders say action ground to a halt while the Government awaited a report by the Productivity Commission on climate change adaptation, which it believed was addressing similar issues.

But in its draft report the commission recommends the Government should only require home insurers to offer flood cover if it can be shown the benefits to the wider community will exceed the costs. It argues against premium subsidies that “would impose a barrier to effective adaptation to climate change”.

The commission’s final report, Barriers to Effective Climate Change Adaptation, was sent to the Government last September but has not yet been released.

A commission spokesman told insuranceNEWS.com.au the final report is to be tabled in Parliament next month.

A spokesman for Mr Shorten says work on the remaining NDIR issues is ongoing but the timetable has changed because of the climate change report.

“Many of the outstanding NDIR recommendations are being considered as part of the Government’s response to the Productivity Commission report. The Government is due to respond in the first half of this year.”

The spokesman says Mr Shorten “remains optimistic that real solutions to improve community resilience and disaster mitigation are achievable”.