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Australian Government - Natural Disaster Insurance Review

Natural Disaster Insurance Review - Submissions Due
Within Two Weeks

5 July 2011

The Natural Disaster Insurance Review Panel today reminded people and organisations that the deadline to make contributions to the Review is rapidly approaching. The closing date for submissions is 14 July 2011.

'We are keen to hear from anyone interested in the availability and affordability of insurance with particular emphasis on flood and other natural disasters. All opinions are welcome, especially from members of the community who have been directly affected by the floods and other extreme weather events of the past summer,' the Chairman of the Review, Mr John Trowbridge, said.

Submissions can be as short as a few paragraphs. The Panel may also seek additional information or clarification from interested parties. The Review Panel will consider all input in preparing its report and recommendations for the Assistant Treasurer, the Hon Bill Shorten MP by 30 September 2011.

'Since commencing the Review we have met with a range of stakeholders and addressed a number of different forums. This week for example we will be meeting various insurance executives, addressing the Institute of Actuaries of Australia and meeting with water engineers in Sydney. The Panel will also be revisiting Brisbane and travelling to Cairns, Innisfail and Tully.'

Further visits and meetings are planned. For example, next week the Panel members participate in an Australian Centre for Financial Studies Forum in Melbourne and a University of Queensland event in Brisbane. 'The Panel has previously met with a range of interested people including consumer representatives, social workers, building experts, local councils, banks and credit unions, as well as with insurers.'

The Review was announced on 4 March 2011 by the Assistant Treasurer.

Insurance plays a key role in the recovery from natural disaster and the private insurance industry has in large part responded effectively to the recent series of storms, floods and cyclones. However, the absence of flood insurance for many policyholders, particularly in Brisbane and Ipswich, has led to considerable financial distress for some homeowners, to many disputes with insurers and to community concern over the coverage of flood in home insurance policies. That is the primary stimulus for the Review.

On 2 June 2011, the Review released an Issues Paper which is publicly available at Also on the website is a summary of the full Paper and an easy-to-read Overview. The Paper has now been distributed widely including to every local government authority in Australia along with insurers, consumer groups and others.

The Issues Paper identifies two alternative models of flood insurance for the future: that flood cover be provided automatically as part of home insurance, just as it provides cover automatically for bushfire and storm; or that flood cover be provided automatically but that homeowners be able to 'opt out' and have home insurance that includes cover for other causes of damage but not flood. The other main possibility is to retain the status quo whereby insurers remain free to offer full, partial or nil flood cover for home insurance and homeowners are free to decide whether or not to include flood cover in their home insurance policies.

'We have tried to explain these two models in sufficient detail for experts and consumers alike to be able to offer their considered views on the relative merits of the two models. We are keen to hear from all interested parties on their assessments of these two models. But I stress that they are concepts only and not yet fully developed. The Review Panel has not yet taken a position or a view on any of the matters raised in the Issues Paper pending submissions now being invited on the Paper.'

The Issues Paper also considers whether any new arrangements for flood insurance for homes might be extended to home units, contents and small business.

Other matters considered in the Paper that have been highlighted by recent natural disasters include non-insurance and under-insurance, replacement cover vs sum insured, consumer awareness and insurance dispute resolution. The Paper also looks at flood risk measurement and mitigation, and some aspects of government funding of natural disaster relief and recovery.

To assist those making a contribution, the Issues Paper sets out a number of questions that highlight issues of particular interest to the Review Panel. However, contributions are welcome on any or all relevant issues.

Those wishing to make submissions should send them to or mail a printed copy to:

Natural Disaster Insurance Review
c/- The Treasury
Langton Crescent

If any assistance is required in making a contribution, please contact the Review Secretariat on (02) 6263 3340.

The Natural Disaster Insurance Review Panel

Mr John Trowbridge (Chairman)
Mr John Berrill
Mr Jim Minto