Insurance isn’t something that you necessarily have front of your mind most of the time but when you lose your house in a flood it suddenly takes on a whole new importance.
Insurance means that you have the opportunity to rebuild, to try to put your life back together – but flood insurance is not available to everyone, particularly those in flood risk areas and leaves then extremely vulnerable following natural disasters such as the 2022 flood.
For a town like Lismore, and many others around the world, this lack of insurance means that they are unable to effectively rebuild following floods. The Inquiry into insurers’ responses to 2022 major floods claims has highlighted that ‘areas with low insurance cover have significantly worse post-disaster outcomes that negatively impact households, local businesses, and local economies’.
This Inquiry was commissioned by the then NRRC for the Community Leaders Forum that was led by Lismore MP Janelle Saffin, NSW Parliamentary Secretary for Disaster Recovery and made up of State MPs Tamara Smith (Ballina), Geoff Provest (Tweed), and Richie Williamson (Clarence); Federal Member for Page Kevin Hogan; and mayors Cr Steve Krieg (Lismore City), Cr Chris Cherry (Tweed Shire), Cr Kylie Webster (Kyogle), Cr Michael Lyon (Byron Shire), Cr Sharon Cadwallader (Ballina Shire), Cr Robert Mustow (Richmond Valley) and Cr Peter Johnstone (Clarence Valley).
‘I thank its authors, academics from the University of Queensland’s Business School – Professor Paula Jarzabkowski, Dr Katie Meissner and Dr Matthew Mason – who are very learned in this area,’ Ms Saffin said.
‘They have made a case study of Lismore that can be extrapolated across the Northern Rivers region, New South Wales, and indeed, other places in Australia.
‘With insurance it appears that the global community is facing similar issues to us with insurance affordability. Whatever is done, government needs to be very involved in the response, and we must require mitigation and adaptation to be in the mix,’ she said.
Ms Saffin has made a submission, on behalf of the Community Leaders Forum to the Federal inquiry into insurers’ responses to the 2022 major floods claims utilsing this report as the basis for that submission.
‘This analysis shows that the current problem of insurability will remain a wicked problem for Lismore, with no foreseeable reduction in the pricing of private sector flood insurance,’ states the report.
‘Without access to affordable insurance:
- Lismore property owners will struggle to attain or maintain mortgages;
- Lismore landlords will struggle to provide a robust residential or commercial rental market;
- Lismore businesses are likely to have their credit and growth compromised;
- The commercial attractiveness of Lismore is likely to suffer.’
Mitigation, relocation and adaptation key
Ms Saffin noted that the submission found that there is no single, pre-existing solution for the complex problem of uninsurability in Lismore.
It makes four recommendations about the potential of a new insurance ecosystem for Lismore:
- A national risk pool is a tested solution that, when well-designed, could support affordable insurance in Lismore for residents and small businesses providing it is accompanied by a medium and long-term program of risk reduction including relocation.
- Small parametric products, which can be spent flexibly by policyholders, have potential to provide economic benefit to Lismore business owners supporting them with rapid response to business interruptions, particularly from small-scale events.
- Parts of Lismore fall within the uninsurable zone and could be considered for insurance innovations to support planned migration and provide insurance cover during any transitionary period.
- Lismore residents and business owners will benefit from a sustained program of embedding risk management capabilities throughout the community to support them in reducing their risk and increasing their financial ability to respond to hazards.
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