Solutions to the surging cost of insuring homes will be the focus of a wide-ranging inquiry into the response to recent devastating floods.
But a government minister says the probe won't be used as an excuse to point the finger at the insurance industry and will instead be focused on finding solutions to sky-high premiums.
The handling of claims has come under scrutiny after 2022 floods that hit several states, with many claimants still battling with their insurers long after the disasters.
These matters and broader issues around affordability and insurer preparedness at a time of intense and frequent floods will be thrashed out in the parliamentary inquiry.
According to the terms of reference released on Thursday, the insurance industry will be probed about the amount of time taken to resolve claims.
Also on the agenda is the affordability of insurance as the growing threat of natural disasters in a changing climate pushes up premiums and prompts many to under-insure or go without cover.
Floods in southeast Queensland and NSW in 2022 broke records as Australia's most expensive natural disaster, costing about $5.87 billion.
Financial Services Minister Stephen Jones said the bill from natural disasters was always going to show up somewhere in the economy.
"Insurance is about self-help, insurance is about people individually looking after the risks involved in their business and their home affairs, and when that doesn't happen, the cost is borne by the greater community, frankly," he said.
Mr Jones said the inquiry would scrutinise everything that affected insurance affordability, including the impact of planning decisions and disaster mitigation.
He said it was not about hammering the insurance industry but rather finding pragmatic solutions to mitigate risk and bring down premiums.
"I'm sure a lot of people are looking at this and saying, 'This is an opportunity to throw some bombs at the insurance industry', and I'm sure a bit of that will happen," Mr Jones said.
"But frankly, what I'm after is some pragmatic recommendations that government, that industry, that individuals can take up."
Insurance prices as measured by the Australian Bureau of Statistics rose 14.2 per cent in the year to June, up from 8.8 per cent in the 12 months to March.
The insurance industry has flagged inflation and the rising cost of reinsurance as two drivers of premium rises in addition to extreme weather events.
A spokesperson from the Insurance Council of Australia said affordability was the number-one concern for the industry.
"We know households are under intense financial pressure because of the rising cost of living right now," they said.
The council, which has launched its own inquiry into insurers’ responses to the 2022 floods, welcomed the parliamentary scrutiny.
"We strongly support the Albanese government’s focus on improving the resilience of Australian homes and communities against extreme weather events, but more needs to be done to ensure insurance remains sustainable as the climate worsens," the spokesperson said.
