The Australian government may have to develop a government-funded scheme to deal with flood risk or work with private insurers to spread risk, if it is going to deal with the chronic problem of flood under-insurance. JP Morgan insurance analyst Siddarth Parameswaran said the government's priorities in the wake of the Queensland and Victorian floods would be to get the industry to come up with a standard definition of a flood and see that the country is covered by comprehensive flood maps.But, further down the track, it should look at the feasibility of introducing a scheme along the lines of the US National Flood Insurance Program, which uses government funds to provide basic cover.Parameswaran said: "The problem with flood is that it is a known event. It is arguably the most difficult for insurers to cover given the relatively high frequency of events."If you know that an area will flood every 30 years, and you will have to pay A$300,000 to rebuild a house, then why would you charge any less than $10,000 a year for cover?"You can insure the risk, but some areas will always have very high premiums and people won't buy the cover."Deloitte actuarial partner Elaine Collins said the government should explore opportunities for public/private partnerships to spread the risk and make cover more affordable.Such a project would have to start with an assessment of the government's financial exposure to changing patterns of weather disasters. It would also involve improvements to flood maps, policies on greenhouse emissions and improved development planning.