I'm not part of the insurance industry, but I can understand to some degree their reticence in relation to flood insurance. The essence of insurance is that you pay a relatively small annual fee that provided cover against a low probability but costly and catastrophic damage that might be caused by some event.

Arguably bush fires are in that category. However, it is clear that flood damage is in a different category. Let me state it plainly. If you build your house in a flood plain, below the level of recorded floods, then it is CERTAIN that sooner or later your house will be flooded. Insurers are not in business to insure people who take decisions that will certainly expose them to expensive damage.

The expectation that either the insurance industry or the government will look after us in the event we suffer a loss is another example of the way that the welfare state has intruded our lives and created an attitude of entitlement in many people.

People who own a house below the flood level cannot argue that they didn't know. During conveyancing, they would surely find out about flood risk. They have had the benefit of living in a lovely riverine environment but don't accept the inevitable consequences of doing so. The only answer is that they must self-insure. If they can't afford that, they shouldn't be living there. Tough. But why should the rest of us be required to pay for their folly?

I would venture that most insurers will happily offer cover if they think a market exists - by this I mean potential insureds prepared to pay what the insurer calculates to be the necessary price for them to provide certainty of cover.

Subsidising the cost of doing so by way of public expenditure is risk shifting so should be analysed on that basis.

Governments and charities are already paying significant amounts to support people affected by the floods so in a sense the risk shifting is already occurring.

Is that a bad thing? Perhaps not but Herbert Stencil's point about risk awareness is pretty important when it comes down to public support of people's private decisions.

Well said Herbert. I am certainly getting very sick of this creeping socialist/communist attitude that is taking over the country, led by ideas like this.

When I bought a river front property I made sure the house was high enough to be flood free. I had to buy a smaller property than I would have liked, to be able to do this, as flood free commands a premium. I could have bought a larger, lower property, & taken the chance, particularly if the government, or the insurance industry is going to reimburse me for my bad choice, when the inevitable occurs.

When a major Qld financial institution raised my house & contents insurance premium by 25% then 32% in consecutive years, they claimed it was to allow them to include flood cover on all policies. The new premiums were higher than I could really afford.

I told them I did not want flood, but they effectively said tough. They have since called me 4 times wanting to know how they can get my business back. I effectively have said tough. I don't need, nor will I pay for flood insurance just to cover the dills.

I am also against disaster relief. It a most unfair way of doing things. If your house burns down due to an electrical fault, tough. If the fire spreads, & a couple of hundred burn down, great. The government will declare a disaster, & pay out heaps of "relief".

When I went off into the pacific in my yacht, I found foreign waters insurance was 7% of the value of the yacht. Fair enough, quite a few are lost out there, but I could not afford that much out of my budget.

I backed myself to navigate well, & did not insure. 8 years later, I toasted myself in in congratulations, I had saved 56% of the value of my yacht, by not insuring. If necessary I would not insure my house if I effectively had to pay a levy I can't afford to cover the dills.

There is a way that the insurance industry might cover risk of flooding for those who have houses built on flood plains under known flood levels.

1. Government (or councils) should ensure that the information on past flood levels is widely promulgated so that everybody knows whether their house/property might be exposed to floods. That is, flood maps should be provided.

2. The Conveyancing process/purchase contracts should require the vendor to state whether the property is prone to floods or has ever been flooded in a riverine flood. The purchaser should be required to sign an acknowledgement that he is aware of the flood risk.

3. Those owning houses/property in flood prone areas across the country should be required to take out flood insurance with a specialist flood insurance group set up for the purpose.

4. There are many many flood prone rivers around the country, and it is likely that only a very few of those will be flooded in any one year. Further, as we saw in Brisbane, the last serious flood was 35 years ago. This means that the insurers can collect premiums across the country and possibly for many years, and build up reserves to insure those exposed.

This sort of approach may require government intervention in some way, for example legislating process to ensure that all flood prone properties take out insurance.

Those who prefer to take out self-insurance can "opt out" but only by signing a contract that acknowledges that they are taking that risk themselves.

Last year when I bought a house we ensured we were on 'high ground' in the event of a flood.

Our insurer, it would appear is the same that Hasbeen rejected, as apparently it is the only one that covers for flood no matter the cause as standard. It even covers tsunami but not coastal erosion. The premium was not as expensive as the one offered by our bank and much cheaper than the logo displayed at the SCG and other insurers.

The floods came and we were surrounded by the mighty Fitzroy River and we watched the 'swampies' stoically go under: "we were flooded in '54 and '92 and survived, so we will rebuild" and no doubt get flooded again.

To my surprise when I recently got my insurance renewal expecting a significant increase to socialise the losses, the premium had actually reduced by a significant amount.

So a revised inventory was done of the contents and the difference used to increase our cover.

I agree with the creeping socialist sentiment but would stop short at the communist paranoia. An example was made during the GFC where institutions deemed too big to fail were given carte blanche to socialise losses while privatising profits. This perversion of capitalism has set the precedent.

We donated to the flood relief but put a stop to it as soon as the flood levy hit. The socialists have all this money we donated but are yet to allocate it all. And now they are taking more. While it is not significant in our scheme of things it still irks.

Herbert Stencil, your proposals are way too sensible and practical to be of any use to those who's experience of floods consist of crocodile tears flowing through the halls of Canberra.

Gerard, this business about flood insurance has been kicked around quite a bit and its time to update yourself with the arguements.

The insurance companies are not there to perform community service.
If you wish those who live in flood plains to be subsidised when they are inevitably flooded out once every 20 or 50 years or whatever, then you must direct your appeal to the government, not to private companies.

As the other posters have pointed out, to expect the insurance companies to pick up the tab for the choices made by consumers is unfair. In Australia, you can get flood insurance only where you don't need it. Those who will, inevitably, be flooded out can't get it for the good reason that it is entirely unprofitable to offer it. That has always been the case in Australia, and the same point has been made over many floods now. Time to update.