A government-run comparison website for home and motor cover would be difficult to implement and may not help consumers buy appropriate covers, the Tasmanian Government says in a submission to a Senate inquiry into the general insurance industry.

Instead, insurers should better help clients understand their specific coverage needs, especially at policy renewal time, and use “unambiguous” communication.

“An insurance comparison service would not be able to address the issue of people not being aware of or understanding their specific risks,” the Tasmanian submission says. “In contrast, Tasmania considers that an improved and ongoing program of engagement between the insurers and the insured would address this issue.

“The Tasmanian Government has previously advocated for insurance companies to actively engage with policyholders to provide them with easy-to-understand and unambiguous information about the level of risk from natural disasters that may threaten a property.”

Consumer confusion about coverage was exposed after last year’s floods, which cost Tasmania more than $180 million in damage.

It remains challenging to differentiate between storm damage and flood damage, despite the introduction of fact sheets to explain the definitions, and a comparator may not make the distinction clear to the consumer, the submission says.

“A key issue in relation to how a comparison service may work in relation to coverage for natural disasters, particularly floods, is how a comparison could be reasonably made between the nature and extent of flood coverage that different policies offer when the cause of such flooding is often the subject of complicated legal disputes.”

The Senate Economics References Committee will report by June 22.