Australia flood coverage rises to unaffordable levels –‘Most people can’t afford insurance. It’s beyond anybody’s pocket.’

By Peter Hannam, carbon economy editor
17 February 2013 (Sydney Morning Herald) – Thousands of Australians are facing soaring insurance premiums for flood cover, forcing many to ditch protection even as the risk of extreme weather increases. Insurers blame the increases on the spate of flooding across much of eastern Australia in recent years – with another $733 million hit to insurers from January’s big wet in Queensland and NSW – as well as improvements in flood mapping. For Tina Taylor, the premium increase is steep for her hobby farm on the bank of the Colo River, a tributary of the flood-prone Hawkesbury River. When insurer NRMA recently quadrupled her premium from $2000 to $8250, she was forced to drop flood cover. Other flood policyholders have faced increases of 500 per cent. “People are prepared to pay a reasonable amount for insurance but, when the cost is unrealistic, you just go without,” Mrs Taylor said. For others, the increase is harder to fathom. One resident of Seven Hills in Sydney’s west, was told by NRMA that her annual premium would more than triple to $3600 even though the council rates her house as having less than a one-in-10,000 year risk of flooding. Insurers blame the increases on the spate of flooding across much of eastern Australia in recent years including a $2.5 billion billion bill for the 2011 Queensland floods – with another $733 million hit from January’s big wet in Queensland and NSW. The chief executive of the Insurance Council of Australia, Rob Whelan, said premiums financed claims and, if claims went up, companies needed to increase premiums. “Price signals are incredibly important as to the level of their risk.” [more]

Flood cover rises to unaffordable levels