Flood cover a bridge too far Flood cover a bridge too far

John Trowbridge, who chairs the natural disaster insurance review, said private insurers have already attempted to increase their level of flood cover after being "badly stung" by the backlash directed at the industry after Queensland's flood disaster.

Mr Trowbridge's comments come as the nation's biggest insurers are expected to hand up their submissions to the review.

Both are strongly resisting calls for a compulsory flood coverage, arguing this would push up premiums and ultimately reduce competition, given it could cause global reinsurers to pull coverage from the market.

Suncorp has called for efforts such as importance of mitigation in flood insurance.

"The fact is, most Australian property owners do not need or want full flood insurance because over 95 per cent of Australian homes are located outside major flood zones," Suncorp's chief executive, Patrick Snowball, told a recent forum.

The Insurance Australia Group chief executive, Mike Wilkins, cautioned against the government launching a national disaster insurance scheme, claiming it could lead to risky housing developments in flood-prone areas.

The Insurance Council of Australia will also release its submission this morning, proposing a rebate scheme on insurance premiums for more than 130,000 properties that are based in high-risk flood zones. All told, 7 per cent of Australian properties are estimated to be in flood risk zones.

The rebate will be funded out of more than $4 billion annually collected by state governments from taxes on insurance policies, the Insurance Council chief executive, Rob Whelan, told as briefing last week. The Insurance Council is also expected to back risk mitigation programs to lower the risk of flooding on properties.

The national disaster insurance review is examining several flood protection options for the industry to consider. This includes compulsory flood cover for all houses; the ability for households to opt out of flood cover to save on insurance costs, and a flood insurance pool for high-risk houses.

Speaking at an Australian Centre for Financial Studies forum, Mr Trowbridge cautioned that even under a compulsory scheme insurance may not be available to everyone in flood-prone areas.

"Flood cover won't be completely available because there are risks that insurers find unattractive; they don't want to write them so they price them appropriately," Mr Trowbridge said. "If they offer it, then it might be on a basis that people can't afford."