Mr Frail was commenting on home-owners' concerns that their houses will be uninsurable and unsaleable as a result of a proposed revision of flood zones.

Almost 500 homes previously considered safe from flooding would be added to the "flood-affected" list under the draft Bowral Floodplain Risk Management Plan for the Mittagong Creek.

Many properties previously considered at low risk would be rated at medium or high risk.

A Farnborough Close resident told last week's public meeting that insurers had advised that they would not cover homes, contents, motor vehicles, caravans or boats against flooding in high risk areas.

Lenders had advised that they would not lend for new purchases in a high-risk area or extend finance to existing owners for renovations, while refusal of insurance could jeopardise existing mortgages, she said.

But Mr Frail said new levels were unlikely to affect insurance because most insurance policies already excluded riverine flood damage.

"There are a small number of companies that do not exclude riverine flood damage, but they are unlikely to offer coverage in high risk areas," he said.

Mr Frail said the ICA had for a long time been urging councils to provide as much information as possible to residents to ensure they were fully aware their properties' exposure to flood.

The ICA would applaud any effort to update flood level data and make zones more accurate, he said.

"Zoning has been a concern to the insurance industry and is one reason why flood insurance is not available," he said.

"One of the concerns of the ICA has been that too many people have been allowed to build in high risk areas and not enough money has been spent by governments at all levels on mitigation," he said.

"Local government is at the end of the line and is not receiving enough funding from State and Federal Governments to complete the work."

Mr Frail said any people with questions should check their insurance policy or contact their insurance company.