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Thursday, 22 May 1980
Page: 3144

Mr Jacobi (HAWKER, SOUTH AUSTRALIA) asked the Treasurer, upon notice, on 30 February 1980:

(   1 ) What proportion of houses and buildings in each of Australia's major cities are covered by household insurance policies.

(2)   It is a fact that while most homes are covered against earthquakes, storm or fire by conventional insurance policies, very few homes are covered against flood.

(3)   Have studies of the River Torrens, which flows through metropolitan Adelaide, shown that the River Torrens is subject to once-in-20 year, once-in-50 year and once-in-100 year floods, thus that Adelaide is now overdue for a major flood, which could subject more than 100,000 houses to flooding in the Adelaide residential area.

(4)   Has the Government rejected proposals for a natural disaster insurance scheme; if so, what financial guarantees will it give to the people of Adelaide in the event of a major flood.

(5)   In view of problems which arose after the Brisbane flood of 1974 concerning the extent of coverage of household policies, will the Government take action to clarify the definition of what constitutes a flood, and will he take action to ensure that residents of Adelaide are fully informed of their position, should a major flood occur.

Mr Howard -The answer to the honourable member's question is as follows:

(   1 ) I am advised that official statistics do not reveal the degree of insurance coverage of houses and buildings in Australia.

(2)   The various property owners' insurance policies offered by private insurers in Australia provide cover against damage from most causes including fire, theft, storm and tempest, earthquake, and numerous other natural and nonnatural events; flooding is not normally automatically included among the risks covered. However, I understand that most insurance companies will provide flood cover if specifically requested, although premiums are high in floodprone areas. It appears that there is not a strong demand for flood cover in most areas where the risk of flooding is low.

(3)   I understand that some preliminary investigation of the flood risk of the Torrens River has been undertaken in recent years and that a comprehensive investigation has recently been commissioned. However, the matter is a State responsibility and I suggest that for more precise details the question be directed to the relevant State authorities.

(4)   In a press statement of 1 7 January 1 979 1 announced that the Government had decided not to introduce a natural disaster insurance scheme of the kind that had previously been mooted; on 4 June 1979 1 tabled in Parliament a policy information paper outlining the reasons for this decision in some detail. It should be borne in mind that primary responsibility for natural disaster relief rests with the States, although in recognition of the difficulty for the States of meeting from their own resources all expenditure incurred on natural disaster relief, the Commonwealth has entered into arrangements with the States to assist them in meeting the costs involved; these arrangements apply to South Australia, as well as to the other States and the Northern Territory. Under current arrangements in this regard the Commonwealth shares with the States on a dollar for dollar basis expenditure on the immediate relief of personal hardship and distress caused by floods and other natural disasters. Eligible assistance includes the provision of food, clothing and accommodation and essential repairs to housing and furniture. As well, in respect of "major" disasters the Commonwealth assists with, on a $3 Commonwealth to $ 1 State basis, expenditures on agreed relief and restoration measures beyond the capacity of a State. In the case of South Australia, arrangements are that this assistance comes into effect once eligible expenditures in respect of all such disasters during the course of a year exceed $3 million. Eligible relief and restoration measures, as they relate to floods in urban areas, include restoration of public assets, loans to small business and to churches, sporting associations and other voluntary nonprofit organisations but do not, as a general rule, include repair and restoration of privately-owned housing; assistance in this area is generally excluded because of the availability of insurance for private houses. This approach is in keeping with the Commonwealth 's view that the natural disaster relief arrangements should not be seen as an alternative to reasonable measures for self-protection. It would not, therefore, be consistent with existing policy .on natural disaster relief for the Commonwealth to provide financial guarantees along the lines suggested by the honourable member.

(5)   The question of the extent of coverage of particular insurance policies relates to the nature and terms of the insurance contract between the insurer and the insured. I would suggest that any person who is unsure of the extent of the cover available under a household insurance policy might contact the particular insurer concerned to clarify the position. It is relevant that in view of the responsibilities of the States for natural disaster relief, it would be a matter for the particular State concerned to inform residents of any disaster relief assistance that would be available in the event of a major flood.

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