A new report has found many residents in flood-ravaged communities across north central Victoria can no longer access home insurance, with others having to choose between basic living costs and keeping their home covered.
In 2022, over 2000 people in the region were forced into temporary housing.
For Bob* and Evelyn*, an elderly couple from one of these small communities, the anxiety lingered long after the water level went down.
“The flood, you deal with it,” Evelyn says. “But the insurance, it stays with you.”
Forty percent of respondents were uninsured or didn’t have full flood cover, due to the policy being too expensive or not offered at all
Living on a fixed income, they say the cost of keeping insurance has become a growing source of stress. They asked us not to use their real names for fear of losing their insurance.
Despite Bob and Evelyn’s premiums rising $600 within a year and having to live in a caravan while repairing their property, they consider themselves some of the lucky ones.
Community law centre ARC Justice consulted over 100 people in the regional towns of Shepparton and Mooroopna, releasing a report that found that 40% of respondents were uninsured or didn’t have full flood cover, due to the policy being too expensive or not offered at all.
The centre’s CEO Damian Stock says many community members were left with no choice but to go without flood cover, a situation defined as “underinsurance”.
Stock says while insurance is generally understood to be a “community-wide shock absorber”, people are being priced out of the private market and have to bear the risk of natural disasters on their own.
“Do I go without food for three days a month to have insurance? Insurance is becoming a luxury,” one resident told ARC Justice.
The research found that many locals’ premiums have double or tripled when they came up for renewal most recently, with one resident saying theirs increased from $2000 to $28,000 overnight, despite not making a claim.
Melanie Domaschenz, manager of South Shepparton Community Centre, says people on low incomes or government payments are hit especially hard.
Do I go without food for three days a month to have insurance?
Resident of a flood-affected area
“We have people still living in flood-affected homes, people who’ve been sleeping on pallets on their floor because they can’t afford to fix their home without insurance.”
While many have no choice but to stay in homes with flood damage, affected residents are enduring more than just poor living conditions. Domaschenz says many have suffered “immense psychological trauma” because of the floods and the ongoing battle with financial costs.
“They’ve lost everything. Their ability to be resilient and keep on fighting, they can only do that for so long when they’re living in a constant state of emergency.”
Flood-affected street in Echuca, Victoria
Lack of transparency
With the compounding problems of rising interest rates, the increased cost of living and soaring insurance premiums, Domaschenz says the community centre’s food relief program is supporting a new cohort of people who have never needed help before.
“There’s a lot of people who are left with $10 a week for all their living expenses.”
The impact of rising insurance rates goes beyond flood-affected households. Stock says many of the residents of the towns included in the survey are concerned about the lack of transparency in how their premiums are being set.
He says that even those whose properties were not impacted by flooding saw a rise in premiums due to the postcode they live in, while others who invested in making their home more resilient were still hit with a price increase.
“We spoke to an elderly household who spent $120,000 raising their home by a metre, and then said it wasn’t reflected in their premium.”
When it comes to unaffordable insurance, residents of the Shepparton area aren’t alone. According to the Insurance Council of Australia, 77% of properties across the country facing the highest levels of flood risk are not insured.
The Australian Prudential Regulation Authority, the insurance regulator, estimates that due to an increase in climate-driven disasters, around one in four homes may be uninsured by 2050 due to unaffordable premiums or lack of access.
Some residents think the government should consider nationalising insurance
Stock says there is growing community desire for government support to make homes more disaster-resilient, and for this to be properly reflected in insurance prices.
Research participants also called for greater transparency when buying into flood-prone areas so people can make informed decisions about where to live.
Considering the increasing threat of events like floods and fires, Stock says some residents think the government should consider nationalising insurance, so that residents in high-risk areas are not priced out.
“Why is this area of risk left to the private market where other areas of risk are considered a public necessity?”
James is a Master of Journalism student from the University of Melbourne. He has published in Cosmos, The Citizen, and has created podcast series for We Are Explorers and Protect Our Winters Australia. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism. LinkedIn
James is a Master of Journalism student from the University of Melbourne. He has published in Cosmos, The Citizen, and has created podcast series for We Are Explorers and Protect Our Winters Australia. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism. LinkedIn
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