On 14 November 2011, the Assistant Treasurer announced that the Government will introduce a standard definition of ‘flood’ for certain insurance policies. The announcement was part of the Government’s response to the recommendations in the Natural Disaster Insurance Review report.
The standard definition will apply when an insurer offers flood cover for a home building, home contents, small business or strata title insurance policy.
Draft regulations on the standard definition will be released for consultation by the end of 2011. These regulations will contain wording for the standard definition of flood consistent with the following form, which was proposed in the ‘Reforming flood insurance: Clearing the waters’ consultation paper:
‘Flood means the covering of normally dry land by water that has escaped or been released from the normal confines of:
A. any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
B. any reservoir, canal, or dam.’
A Regulation Impact Statement was prepared by the Treasury and was assessed as adequate by the Office of Best Practice Regulation.