Lismore Locals Call For Federal Government To Underwrite Insurance After Flood Disaster

Many locals were forced to go without insurance after premiums were jacked up to over $20,000 a year.

LISMORE, AUSTRALIA - MARCH 02: Discarded furniture outside a flood affected property on March 02, 2022 in Lismore, Australia. Several northern New South Wales towns have been forced to evacuate as Australia faces unprecedented storms and the worst flooding in a decade. (Photo by Dan Peled/Getty Images)

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It’s been just over six weeks since the first of two catastrophic floods tore through the Northern Rivers, destroying nearly 4000 homes and rendering thousands of people across the region homeless.

For residents in Lismore, Coraki, and Woodburn — the most badly hit areas — the road to recovery is going to be a long one. Whatever physical rebuilding had been done after the first flood was flattened when the second one came through on March 30. They had to start all over again.

The rebuilding and recovery will take years; now, for many, the focus turns to insurance claims. For many who weren’t insured, they face an uncertain future, and even those who were insured have been finding the process incredibly difficult and prohibitive.

After 2017

Floods and Lismore go hand-in-hand. Sitting on a floodplain at the junction of Wilsons River and Leycester Creek, the city has flooded, sometimes majorly, many times over the years. The biggest flood — which locals still talk about, and for which there are markers on power poles throughout the town — was the ’74 flood, which peaked at just over 12 metres. At least, it was the biggest until this year — the flood in February reached over 14 metres.

In March 2017, the Lismore levee overtopped for the first time in history, causing incredible amounts of damage throughout the town. Until this year, there was never any thought that the floodwaters could go higher than this — 2017 was it, that was the biggest.

That flood had a significant effect on insurance premiums. Visiting the area a week after the second flood, we were told by locals that before 2017, flood premiums would set residents back a couple of thousand dollars a year — expensive, but not massively prohibitive. After 2017, they were jacked up to over $20,000 — some are reporting as high as $30,000. Some businesses would have cost $70,000 to insure.

“All of these people are living in what you would consider an economically disadvantaged area,” Sue Higginson, an environment lawyer, farmer, and Greens member, told Junkee. “All of these people simply did not have that amount of money to pay their premiums. And of course, the normal cause of action for insurance is if you don’t pay that amount, you’re not insured. The only thing you could do is opt-out.”

Many around Lismore simply didn’t have a choice — there was no way they could pay premiums that high, but they also couldn’t just up and move. They were stuck, hoping for the best. Others did have a tough choice: pay the premium, or trust that they were sitting above the historic flood level, in which case they would scrape by if another event occurred. So many opted out, having assessed the risks.

Houses across Lismore were thought to have been prepared for a major flood — they’d been built up high, raised beyond the supposed flood level. But no one was expecting to be smashed that badly in February, no one was expecting flood-ready houses to have water up to their roofs.

“There was never the expectation of that amount of water going that quickly, which is what caused the damage,” resident and business owner Kym Strow told Junkee. “It wasn’t like this nice gentle rise. She fisted that town fucking fierce and it destroyed everything in its way.”

Questions Over Damage

“There’s a lot of conversations around, ‘oh how much of this is storm damage and water damage before it was flood damage?’ Basically, what language can we use to help benefit us in these situations?” said Kym. It’s a line we hear repeated by a number of locals and constantly discussed in Facebook community groups: insurance companies quibbling over what specific kind of damage was sustained, and whether they can pay out claims.

People also apparently got caught in a trap of thinking they were covered by having contents insurance. “A lot of people had contents insurance and they thought ‘oh well I’m covered’, and they’re not. And they’re finding out and that’s rather tragic too,” Member for Lismore Janelle Saffin says.

The wait times are causing frustration too. “Nothing needs to take two fucking months anymore,” Kym says. “Like that’s just not reality. Why does this need to take this long? Two months when you have nowhere to live or nowhere to make your money is a really long time.”

The NSW Government has kicked off the Back Home grant program, offering $20,000 to people unable to claim insurance on their property. Saffin says she pushed for more than double that.

“I’ve asked for $50,000, and I think fifty is reasonable,” she says. “If someone says to you, right. Okay. Here’s 50. You can start to get back home. You can go, ‘Okay I’m gonna do the kitchen and the bathroom…the biggies, and then you’ll get other things done bit by bit.”

Saffin — who was rescued alongside numerous others in the first flood — says she’s currently considering putting Colorbond steel on the inside of her house. “All my walls are gone,” she half laughs. “I thought about maybe putting Colorbond on the inside instead of outside. I’m looking at different colours at the moment.”

The federal government initially declined to fund half of the Back Home program, a decision that bewildered Saffin. “I have no idea,” she responds, when asked whether she had any idea why.

After initial outrage, the Commonwealth said it would split the funding.

Premiums Will Continue To Rise

Insurance companies, for years, have been flagging that premiums would rise due to the increased risk of extreme weather events.

“As the climate changes and the weather becomes more extreme, I think we’ll have to accept that in some places you just can’t treat the risk [by adaptation],” Tom Davies, an insurance consultant who worked with the Insurance Council of Australia, told The Guardian recently. “We’ll have to retreat.”

“There was never the expectation of that amount of water going that quickly.”

As The Guardian notes, the Insurance Council of Australia released its resilience report in February — which called on the federal government to spend $200 million on infrastructure (building levees, strengthening bridges) that would mitigate damage from weather events. Higginson also believes it’s time for the government to start underwriting insurance for those who are stuck in situations like those in Lismore.

“[The Greens] made an announcement moments after the first event, saying that the Commonwealth government insurance pool scheme needs to be broadened and needs to include those that have been left out and are suffering in Lismore,” she says. “We actually sought to amend the existing legislation in the last sitting week of parliament in March this year, but unfortunately the Coalition and Labor didn’t support those amendments.

“At the end of the day, the government needs to step up to fill this gap. And then insurance companies can fight it out with whoever they see fit later at the moment — the blame game they’re playing at the moment is just compounding the trauma. It’s delaying the building back of a regional city that desperately needs to be rebuilt in a safe and meaningful way. And people are just not getting what they need.”

Jules LeFevre is the editor of Junkee and grew up in the Northern Rivers. She is on Twitter.

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Photo Credit: Dan Peled/Getty Images