Amidst calls by Prime Minister Julia Gillard that insurance companies should exercise extra leniency in dealing with flood-related damage claims, reinsurers appear ready to be more accommodating but the industry insisted that those who do not have flood coverage are beyond their capacity to help.

The whole issue is not about compassion, according to the insurance industry, but the reality that people without flood insurance would not be able to collect compensation, said Munich Re Australia managing director Heinrich Eder.

And that reality could affect some 60 percent of homeowners in Queensland alone, as UBS has reported that such surprising numbers of flood victims were without flood insurance policy.

To put it simply, Eder stressed that despite the widespread disaster, the fact remains that "those who have bought insurance for flood, they will be compensated by those insurers, and those who haven't can't expect compensation for a cover which they have not bought."

Also, consumer group Choice backed the UBS report as it revealed that less than 50 percent of the insurance policies it surveyed contained provisions for flood damages, with the Insurance Council of Australia admitting that while the situation may be unfortunate and regrettable, no compensations would be given for those not covered.

Such development prompted calls for the federal government to revisit the definition of floods in the country's insurance industry, which was welcomed by the industry as Eder pointed out that "if we had a flood definition and flood definitions were suggested, it's always good to have because it gives clarity, what is covered and what is not covered."

He cautioned though that the proposed re-definition would not ensure coverage as a common meaning for such incidents could only create confusion in interpretation, with the Insurance Council of Australia agreeing that "the critical issue is around flood mitigation works and flood information around flood mapping."

Still Choice director Christopher Zinn is insistent that establishing a standard meaning for such a disaster is called for in these times as he lamented that a common definition for flood damages in insurance policies is lacking.

That void, according to Zinn, resulted to people actually believing that "they have flood cover but the particular sort of water that inundates their place may not be covered by their particular policy."