The handling of claims has come under scrutiny in the wake of the devastating floods that hit several states, with many claimants still battling with their insurers long after the disasters struck.
These matters and broader issues around affordability and insurer preparedness at a time of intense and frequent floods will be thrashed out in a parliamentary inquiry announced last month.
According to the terms of reference, released on Thursday, parliamentarians will probe the insurance industry about the time frame for resolving claims, as well as obstacles standing in the way.
Also on the list is the affordability of insurance, with the growing threat of natural disasters in a changing climate pushing up premiums and prompting many to under-insure or go without completely.
Financial Services Minister Stephen Jones said the cost of natural disasters was always going to appear 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 told ABC News on Thursday.
Mr Jones said the inquiry would scrutinise all the ingredients influencing insurance affordability, including the impact of land use planning and disaster mitigation.
He said his priority was not about hammering the insurance industry, but 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 jumped 5.3 per cent across house, house contents and motor vehicle products in the three months to June - the biggest quarterly rise since 2000.
On an annual basis, the category has risen 14.2 per cent in the year to June, up from 8.8 per cent in the 12 months to March.
The Insurance Council of Australia says floods across northern NSW and Queensland in early 2022, the NSW Hawkesbury in July, and several states in October and November cost $7.17 billion from more than 300,000 claims.
The council, which has launched its own inquiry into insurers' responses to the 2022 floods, has welcomed the parliamentary inquiry.
The insurance body called on parliamentarians to examine the impacts of past decisions on land use and the effects of state insurance taxes on customers.
The committee will hear directly from affected communities, with a final report to be handed down in the third quarter of 2024.
30°C