A Federal Government review of the states’ disaster insurance says some of them are using the Commonwealth’s disaster arrangements as their insurer or reinsurer, rather than buying adequate cover for their assets.

The report says that from 2002 to 2011 Queensland received more than $2 billion from the Federal Government’s Natural Disaster Relief and Recovery Arrangements (NDRRA).

This compares with NSW, which received $283 million, Victoria $542 million, WA $2 million, SA $4.7 million, Tasmania $9.5 million, the Northern Territory $37.7 million and the ACT $16 million.

An analysis by KPMG says the NDRRA is “acting as Queensland’s insurer” and as a reinsurer for several other states.

The Federal Government last year changed the disaster arrangements to restrict the funding of states that do not buy adequate insurance.

States will not be eligible for the maximum level of support unless they have a regular independent assessment of their insurance arrangements.

The issue arose after last year’s summer floods, when it was found Queensland had not insured assets such as roads and bridges but was instead relying on the NDRRA, which is jointly funded by the Commonwealth, states and territories.

The Federal Department of Finance and Deregulation asked the states and territories for information so it could review their insurance, but in its first report says their responses were so varied it cannot decide if the insurance is adequate.

Nor has it been able to make any recommendations on rates of assistance.

The only government to pass muster is the ACT, which the report found has appropriate, cost-effective arrangements for both the territory and the Commonwealth.

The report describes as “unusual” the fact that some states have not conducted a formal cost-benefit analysis in selecting insurance.

“In many cases states have not obtained, nor even sought, market quotations for insurance but rather have based their assessments on assumptions about the market appetite for providing coverage and/or its cost-benefit.”

A statement from Attorney-General Nicola Roxon and Finance Minister Penny Wong welcomes the report “as a positive milestone in the review process” and says there will be a further report later in the year that assesses the effectiveness of the states’ insurance.