ICA promises common flood definition is no exclusion tool

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25 August 2008

Insurance Council of Australia (ICA) CEO Kerrie Kelly has defended the controversial common industry flood definition, saying it will improve rather than restrict access to flood cover.

Speaking at the Claims Convention in Melbourne last week, Ms Kelly moved to distance the ICA from claims insurers may use broad terms of the common definition to exclude cover or increase premiums.

Both the Australian Securities and Investments Commission (ASIC) and the National Insurance Brokers Association (NIBA) have expressed that concern in submissions to the Australian Competition and Consumer Commission (ACCC).

But Ms Kelly says the definition will be used in good faith.

“This is not an exclusion term,” she said. “It is a common benchmark for the definition of inland flood.

“Individual policies may use the definition [as is], or use less of the definition or more of it. It is only a benchmark but it is a starting point for consumers to compare policies.”

The ACCC conditionally granted the proposal in July and is due to make a final determination on the definition next month.