New Australia PM Kevin Rudd is supporting the insurance industry's drive to improve the country's flood mapping systems

As Australia’s new federal government puts increased emphasis on responding to climate change, including the threat of more frequent floods and coastal inundation, the nation’s insurance industry is moving to resolve how it can provide flood cover to more Australians.

The industry, through its peak body the Insurance Council of Australia (ICA), is working with federal, state and local governments on developing better flood mapping systems. The industry says that is essential before it can accurately price the risk.

ICA has been devising a more coordinated approach to flood modelling through the National Flood Advisory Group, which operates under a body representing the three levels of government, the Council of Australian Governments (COAG).

A similar task was started in 2003 by the US Government’s Federal Emergency Management Agency (FEMA) through its flood mapping modernisation program, due for completion in 2010.

The Australian process began in 2006 as part of a review of natural disaster responses and an attempt to address the longstanding absence of widely available flood cover throughout Australia.

“ICA has said the lack of accurate flood mapping data, which would allow insurers to map, understand and price the risks for individual properties, has meant flood cover is not widely available to Australian consumers.

It has gained more urgency because of the focus being placed on climate change by new Labor Party Prime Minister Kevin Rudd. Since winning office last November, Rudd has, in contrast to his predecessor John Howard, made Australia a signatory to the Kyoto Protocol, committed to a carbon trading scheme, set targets for cutting greenhouse gas emissions and set a goal for use of renewable energy.

Rudd has received an interim report on the impact of climate change on Australia from the economist he and the state premiers appointed to conduct a review, Professor Ross Garnaut, who is due to deliver a draft report by June and a final version by September.

The Garnaut Climate Change Review has noted the possibility of climate change delivering increasingly frequent floods, through storm surges, river flooding or flash flooding, and higher sea levels. The review pointed out that most insurers in Australia do not provide flood insurance for private households, in part because of “complexities and uncertainty” in assessing the flood risk to individual properties.

ICA has said the lack of accurate flood mapping data, which would allow insurers to map, understand and price the risks for individual properties, has meant flood cover is not widely available to Australian consumers.

In a 2006 submission to COAG, ICA said 711,000 residential and commercial properties were within 3km of the coast and below 6m elevation, making them vulnerable to coastal inundation.

“An ICA spokesperson said 'significant progress' had been made on developing standardised wording for flood cover and an agreement reached on a preferred model for a flood classification risk system

It suggested almost 170,000 residential properties – 2.4% of Australia’s total 7.1 million properties – were susceptible to one-in-100-year riverine flooding, meaning they stood a 1% chance of being flooded each year. About 58,000 homes were in the one-in-20-year zone.

ICA spokesperson Paul Giles said “significant progress” had been made on developing standardised wording for flood cover and an agreement reached on a preferred model for a flood classification risk system.

Giles said all state and territory governments had agreed to share their available flood data and the council would now decide who would conduct the flood mapping work.

But he said ICA would not end up “owning” the data, and any flood mapping tool should be widely available.

Rudd has now pressed his Climate Change Minister, Senator Penny Wong, to step up efforts to develop a national coastal vulnerability assessment to take account of possible inundation around the nation’s heavily populated coastline.

The assessment would enable local councils to assess their planning and development approval processes in light of predictions about which areas may be most at risk from rising sea levels.