Former Australian Federal Police commissioner Mick Keelty will head an inquiry into the Margaret River bushfires that destroyed 41 homes and burned out more than 3400 hectares of land.

The fire was caused when a prescribed burn by the Department of Environment and Conservation jumped containment lines.

Insurance Council of Australia Special Risks Manager Laurie Ratz says the current estimate for insurance costs from the Margaret River fires is $40 million.

“The figure will probably move by plus or minus 5%,” he told insuranceNEWS.com.au.

Mr Keelty will report to the WA Government’s Public Sector Commissioner late next month.

WA Premier Colin Barnett says the inquiry “is not about the validity of prescribed burns; it is all about the decision-making process”.

He says the State Government will not broaden the inquiry to include the most recent major fire in southwest WA that also began with a prescribed burn.

Mr Barnett has also taken the emergency Services portfolio from Rob Johnson and transferred it to Transport and Housing Minister Troy Buswell. Mr Johnson will retain responsibility for the police and road safety portfolio.

Meanwhile, law firm Slater & Gordon says it will wait until the inquiry is completed before deciding whether to launch a class action on behalf of residents and property-owners in the Margaret River area.