The Government has released its Response to Natural Disaster Insurance Review (NDIR) Recommendations as well as a Consultation Paper – Reforming Flood Insurance: A Proposal to Improve Availability and Transparency which proposes requiring all insurers to offer flood cover in home building and home contents insurance policies they sell, while allowing consumers to ‘opt out’ of flood cover when they purchase insurance.

The Government proposes to release draft regulations about the standard definition for consultation by the end of the year:

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.

The Government will also implement a requirement for insurers to provide their customers with a Key Facts Sheet for all home and home contents policies. The Key Facts Sheet will clearly set out, on a single page, all key information about the features of the policy. The Key Facts Sheet will complement the existing Product Disclosure Statement.

The Government will also discuss with lending institutions a mechanism to remind borrowers annually of their obligation to maintain insurance and of the risks of under-insurance.