Insurers outline reform plan

THE insurance industry has gone on the front foot on flood and disaster coverage.

THE insurance industry has gone on the front foot on flood and disaster coverage, outlining a reform blueprint as Assistant Treasurer Bill Shorten called for a federal inquiry into the arrangements.

The industry's "10-point plan to tackle disaster" includes the formulation of a standard definition for flood -- a white-hot issue amid complaints about insurers quibbling over paying damage claims.

Mr Shorten said the government's negotiations with insurers to reach a standard definition for what constitutes a flood would run in tandem with the wider inquiry into disaster insurance coverage.

"There's three or four categories of water inundation," he said. "It either comes from the sea, it comes from a storm or it may come from a storm in a different part which leads to river levels rising and then you get flooded. This is not too hard."

The Insurance Council of Australia said its plan included simplified policies and product disclosure.