This report outlines the findings and recommendations from a year of investigation by the House of Representatives Standing Committee on Economics into the collective failure of insurers to meet their obligations after the 2022 floods. This report details 86 recommendations to improve claims management, improve the transparency of reporting, lower premiums for households and improve long-term strategies for flood preparation and resilience. 

In 2022, floods devastated communities across Australia. The floods in February and March impacted large areas of NSW and Queensland resulting in more than 240,000 insurance claims. The catastrophe cost insurers $6.3 billion – a national record.

The Committee makes findings and recommendations across three core areas.

1. Policyholders: have a right to expect the timely and fair consideration of their claims. The report concludes that many cases arising from the 2022 floods were badly mishandled by insurers, and recommends new arrangements for the robust reporting of claims, handing data to regulators and the publication of this data in order to hold insurers to account.  
2. Pooling: is the key mechanism by which both private and social insurance protects people; premiums are pooled so as to be distributed to those adversely affected. This report identifies areas where pooling is under threat. In particular, the Committee is concerned that the increasingly high-quality data insurers rely upon is undermining pooling at the higher risk end of the market. The Committee believes that some form of government intervention will be required and sets out a number of principles to guide intervention.
3. Preparation: the report observes that the best way to reduce premiums is to reduce risk. In addition to community level mitigation, a range of property level mitigation measures are proposed. 

Key recommendations

• Registration of the General Insurance Code of Practice with the Australian Securities and Investments Commission (ASIC) and the Code be made enforceable through insurance contracts.
• Standardising key terms across all insurance contracts through legislated definitions.
• New regulatory guidance by ASIC to clarify that insurers cannot deny claims based solely on expert reports that do not link the damage observed with the reported cause.
• Disclosure of flood risk levels through property conveyancing and rental agreements.
• Explore regulatory mechanisms to discourage banks from financing new high risk housing developments.
• Change building codes to boost flood resilience.
• Extend the Bushfire Resilience Rating App to flood risk.
• Require insurers to reduce premiums after household-level mitigation works.
• Further development of buyback and resilience programs for the highest-risk properties.