New South Wales south coast residents impacted by the Black Summer bushfires have shed light on how flood victims might fare in a priced-out insurance sector weighed down by stalled policy.
Dr Bronte Somerset’s town of Quaama in the Bega Valley was engulfed by fire on New Years’ Eve 2020. Although the home she shares with husband, Richard Parker, was saved “by a whisker”, their small insurance claim was not without its problems.
“Despite communication difficulties, the repairs were completed, eventually. It was a fraught time and perhaps people weren’t as on-the-ball as they were before the fire,” she says.
Accessing government and charitable assistance was problematic. The only help Somerset was able to access easily came from the NRMA, and a wheelbarrow donated by Anglicare which Somerset used in the cleanup until she was hospitalised.
“Everybody suffered in some way or another,” she says.
The couple moved to Quaama after being priced out of the Sydney market, and while housing was more affordable, insurance costs were already on the rise. They depend on income from providing thesis preparation services to supplement their pension.
Somerset says she feels lucky to have work to help pay medical, car and house insurance.
“We are in our 70s, but I can’t see how we could ever fully retire.”
Many other Black Summer survivors on the south coast speak of the longer-term challenges that recent flood survivors are just starting to experience. Insurance is one of the common themes, whether residents were adequately covered, underinsured, or not insured at all.
‘Never happen again’
At Bundamba in south-east Queensland, mechanic Gavin Fletcher says his home and workshop flooded in 2011, something he believed local flood mapping indicated would never happen again.
When his insurance rose to $36,000 a year, he had little choice but to let it lapse.
In 2013 it did happen again, with flood waters lapping across the floor. According to Fletcher, Bureau of Meteorology warnings indicated this year’s flood was supposed to peak at that 2013 level. Instead, his crowdfunding campaign shows mud-covered boxes upstairs, stacked above kitchen benches.
“The loss would be in the hundreds of thousands,” he says.
Art director Helen Koker returned to Lismore, where she grew up, due to the high cost of housing in Sydney.
She woke very early on 28 February with water halfway up the walls. Her $500 a week rental sits along the escape route from dangerous flood waters. She did not have insurance to cover her house and business contents, including equipment she uses for photo shoots and art direction.
“Am I kicking myself? Of course I am. But I’m a startup, I can’t afford insurance,” she says.
Many people go without insurance because the cost is prohibitive, in part due to the taxes. In 2019, the year of the Black Summer fires, the cost of policies were driven up by stamp duty, GST and fire and rescue service levies.
This year, there has been little mention of Treasury’s broad-based insurance guarantee recommendation after the 2011 floods, meant to safeguard against skyrocketing premiums.
The same National Disaster Insurance Review recommended that Centrelink customers, such as Helen Koker’s brother Ian – who was eligible for assistance after joining her business during the pandemic – should be able to pay insurance policies off through their benefits.
“That would make things so different,” Koker says. “We had so many bookings coming up. Now, all we have is lost bookings. Every person is feeling alone and forgotten in Lismore.”
Priced out
An Insurance Council spokesperson says national underinsurance rates “could be as high as 87.5%.”
This happens when assets are undervalued to make policies affordable, but it opens the possibility for residents to be considered as a co-insurer, assuming the risk for the uninsured portion of the property themselves.
During the 2011 southern Queensland floods, the then prime minister Julia Gillard urged insurers to show compassion because 60% of homeowners did not have flood cover.
Flood coverage is now standard, but according to Jodi Bird from the consumer advocacy group Choice, the term “flood” mainly covers inland watercourses.
“Storm surge may be a primary feature of the current flooding event, particularly for coastal areas,” Bird says.
“Many people have been priced out of flood insurance, so people in high-risk flood areas wouldn’t be covered now.”
The Canstar database – which claims to be Australia’s biggest financial comparison site – has no policies that cover flood from seawater or tides.
Insurance premiums have become so expensive in parts of northern Australia that a $10b government guarantee has been introduced to cover cyclones.
The solution may lie in policy reform. The NSW Greens MLC David Shoebridge has proposed basic bushfire cover through a universal insurance policy based on New Zealand’s earthquake model. “But it is important to also ensure that this model doesn’t facilitate new buildings in areas that should not be built on,” he says.
The Insurance Council’s spokesperson says $2bn in prevention will save Australians $19bn by 2050, and that “all governments must do more to protect homes, businesses and communities from the impacts of extreme weather”.
Although the cyclone guarantee indicates reduction in insurance costs of up to 46% the same could be achieved by scrapping regressive taxes on insurance, a move which both the Insurance Industry Council and the ACCC said would increase coverage.
Difficult talk
For Koker, as a young entrepreneur, the world of insurance is new.
“I am not from a moneyed background. I know nothing about insurance,” she says.
But Somerset says she can’t imagine being uninsured.
“How else can you protect yourself if you don’t have access to that? It’s a crazy gamble and it took me 10 years of sacrifice and struggle, renting rooms in garages to save up to buy my house.
“But not everyone is capable of that … my husband, Richard, has never insured anything; but to me, if you have assets, you must insure them.
“It’s hard enough losing priceless assets, but to lose the roof over your head … I feel very sorry for people in that position.
“It’s a very, very difficult subject to talk about,” she says.
Elizabeth Walton is a freelance writer from the NSW south coast. During the Black Summer bushfires, her township was repeatedly evacuated and phone, power and internet were not restored for weeks.
