Federal Treasury says it is looking at which natural hazard definitions are most in need of standardisation and has flagged future public consultations.
The work on the issue follows the Federal Government’s October budget announcements on mitigation spending and other measures related to insurance and natural hazard resilience.
“Treasury has conducted targeted stakeholder meetings seeking views on which natural hazard definitions are most in need of standardisation and how the standard cover regime could be changed to ensure it is fit-for-purpose,” a spokesperson told insuranceNEWS.com.au.
“It is expected that additional public consultation will take place in due course.”
The Insurance Council of Australia (ICA) says it’s aware of the interest in standardised definitions across a number of product classes.
A spokesperson says ICA has been working constructively with the Federal Government and other stakeholders throughout the process.
“We are mindful that standardisation across definitions may not solve coverage issues on its own, and needs to be considered in light of competition compliance requirements,” the spokesperson said.
A standard definition for flood was introduced in 2012 after severe weather and heavy rainfall caused the inundation of homes in Brisbane and other regions in 2010-11. The events highlighted that many people didn’t have flood cover, leading to a Federal Government review.
Consumer groups have long pushed for further work on the standard cover issue, including around definitions for hazards and exclusions, such as for “wear and tear”.
The Australian Competition and Consumer Commission Northern Australian Insurance Inquiry report, released in 2020, backed a review of the standard cover regime and recommended that Treasury should develop a proposal to standardise definitions of certain events, including “storm”.
“New standard definitions should be drafted in a way that removes potential gaps in coverage between prescribed events, avoids the introduction of ambiguous concepts, and does not unnecessarily limit insurers’ scope for future beneficial product innovation,” it said.