TENS of thousands of Australians will potentially be exposed to financial losses for at least another two years because there is still no definition of flood written into a bill to be debated in the nation's parliament.
The clear meaning of the word ''flood'' is the centrepiece of insurance policy reform but is yet to be established a year after the horrific Queensland floods and four years after bureaucrats first considered how to make policies easier to understand.
If the definition of flood was decided on tomorrow it would not be forcibly put into household policies until 2014 because the government is giving insurance companies two years to get used to the changes.
Householder advocate Consumer Action Law Centre told the government the reform was taking too long.
Bank reforms which included banning mortgage exit fees took just six months to introduce after being proposed at about the same time as changes to insurance policy legislation.
The proposed legislation to be debated - the Insurance Contracts Amendment Bill - says the one definition for flood would be written into regulations linked to the bill.
People could not even be told whether sea water going into homes was a flood, according to a statement to a parliamentary review hearing by the Insurance Council of Australia's general manager John Anning.
''It would depend on what the definition of flood is decided to be,'' Mr Anning said.
Deputy chair of the House of Representatives Economics committee Steven Ciobo, a Liberal MP, said Labor's way of writing the definition of flood after the bill was okayed was a backward approach.
''There are many people who continue to think they're covered but are not,'' Mr Ciobo said.
''This is the consequence of poor governance which has created uncertainty.''
Policy holders can expect a fact sheet from their insurer explaining whether or not they are covered for flood damage once the changes come into force.
A spokesman for Minister for Financial Services and Superannuation Bill Shorten said it was normal for legislation to establish the regulatory framework.
''We have already seen the government's reform agenda have an impact on the performance of the industry,'' the spokesman said.
''A number of major insurers have moved to increase flood coverage.
''A number of major insurers are already using the government's preferred definition of flood.''