The Gillard Government is continuing its efforts to make flood insurance simpler and more effective following the release last month of the report of the Natural Disasters Insurance Review.
Draft regulations to introduce a standard definition of “flood” for insurance contracts of home building and home contents (combined and individual policies); small business; and strata title insurance policies were released today.
They follow the announcement by CGU Insurance to extend flood coverage, based on these regulations, to all home, contents and landlord policies nationally.
The regulations include the proposed wording of “flood” to be used in these insurance contracts:
Flood means the covering of normally dry land by water that has escaped or been released from the normal confines of:
A. any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
B. any reservoir, canal, or dam
Assistant Treasurer, Bill Shorten, said “Today, the Government also welcomes the announcement by CGU that, from February 2012, it will be extending flood insurance coverage. This will be based on the new definition to be included in the Regulations and demonstrates the positive impact that is already being seen as a result of the Government’s policies.”
The CGU announcement also reflects the importance of the Government’s initiative to boost funding for centralising flood mapping data and how this will underpin broader flood coverage by the insurance industry.
“I call on other insurers to match CGU’s improved customer service on a range of fronts, including flood coverage, payment frequency and dispute resolution.”
The proposed definition is consistent with the recommendation of the Natural Disaster Insurance Review, that the Government introduce a standard definition of ‘flood’ in the form proposed in the Assistant Treasurer’s ‘Reforming Flood Insurance: Clearing the Waters’ consultation paper.
Public release of the draft regulations follows the introduction into Parliament on 21 November 2011 of the Insurance Contracts Amendment Bill 2011 that provides a legislative framework for the standard definition of “flood”.
“People are entitled to know exactly what is, and what is not, covered under their insurance policies. This is a pretty straightforward proposition, but inconsistent definitions of what constitutes a “flood‟ created confusion and heartache for many people after the flooding in eastern Australia earlier this year,” Mr Shorten said.
“The release of these draft regulations is an important step in ensuring consumers can make informed decisions about the level of flood cover they need.”
The Government is seeking comments on the definition of “flood” proposed in the regulations along with other aspects, including the definition of ‘strata title residence’ and the test to determine whether a business is a small business for these purposes. The draft regulations can be found on the Treasury website www.treasury.gov.au
The deadline for submissions is 3 February 2012.
Chair of the Social Policy and Legal Affairs Committee, Graham Perrett MP, said “The Social Policy and Legal Affairs Committee has already heard evidence raising concerns about the affordability of residential strata title insurance, so we are pleased to more closely examine this issue.”
“The Committee will travel to Cairns to hold public hearings in January 2012.”
Media Contact: Shannon Walker – 0414 694 476