The Victorian Government has held talks with the head of Swiss Re’s global partnerships division regarding the state’s insurance arrangements.

It’s understood that the Victorian Government, which underwrites the state’s exposures through its captive insurer the Victorian Managed Insurance Authority, began considering its insurance options after the Black Saturday bushfires in 2009.

Ivo Menzinger, MD of Global Partnerships at Swiss Re, says the company is “trying to get a dialogue going” with state and federal governments in Australia about looking beyond simply insuring current liabilities, such as infrastructure and state buildings, to take more of a “balance sheet view” of risk.

He says that in the event of a natural disaster, governments have “quite a lot of contingent liabilities that are not insured at the moment and could affect budgets”.

These contingent liabilities include things such as funding clean-up, emergency relief and lost tax revenue, all of which have the potential to affect GDP figures.

Mr Menzinger says governments’ current approach to financing their risks is to either reallocate budgetary spending after a disaster or to raise or introduce new taxes.

“What we are trying to advocate is that the mix of financing is more balanced,” Mr Menzinger said, adding that the approach is not necessarily just about risk transfer to the private market but also about reducing and adapting to risks.

He says that while it is early days in the discussions, the issue is particularly important in light of the debate around what constitutes appropriate government insurance cover.

The insurance arrangements of all state governments will soon become public as the Federal Government’s Economics Reference Committee is due to report on the matter to the Senate on May 2.

In March the committee was asked to conduct an inquiry into the “current insurance and reinsurance arrangements of the states and territories of their assets and infrastructure and the appropriateness of fiscal arrangements for natural disaster reconstruction efforts”.

The inquiry has been tasked to put particular focus on Queensland, and the Queensland Government must provide “any correspondence, and any related documents, between the Queensland Government and any insurance advisers, insurance brokers, reinsurance brokers, insurers and reinsurers in relation to providing services or insurance products, or offers or proposals of insurance or reinsurance of Queensland Government assets, from January 2000”.

Under its terms of reference, the committee will hold least three days of public hearings in Queensland.