Insurance madness at a premium
It doesn’t matter what suburb you’re in or whether you’ve been affected by flooding, major insurers are cancelling the Coast. Insurance Council Australia CEO Andrew Hall is calling for help
“YOUR house is on the Gold Coast?”
The insurance representative from Budget Direct pauses ominously, before delivering judgment.
“I’m sorry, we don’t provide coverage for any home in that city anymore.
“The threat is just too high.” It’s the same response from Youi.
It doesn’t matter what suburb you are in, whether you’ve been affected by flooding or whether you even want flood cover … major insurers are cancelling the Coast.
And for those who can still afford to provide coverage, residents may soon find they can no longer afford the premium.
It’s not just residents impacted but businesses as well, with the Council of Small Business Organisations Australia reporting that insurance premiums have quadrupled in some industries.
In this world where onein-100-year floods are hitting every decade, reality is biting hard.
Even for Insurance Council of Australia CEO Andrew Hall, whose job it is to tour natural disaster sites and to declare catastrophes, what he is seeing with his own eyes is still unbelievable. and people from the next onslaught of extreme weather, saying it will save lives and is the only way to bring back affordable insurance … or any insurance at all.
“This is a crisis on so many levels,” says Mr Hall the morning after visiting the devastated CBD of Lismore.
“What we’re seeing right now in northern NSW, I don’t think anyone can really comprehend it. Whole towns have been wiped out.
“Now we have to ask, do we keep rebuilding in the impact zone?
“We have to look at actually relocating the centre of Lismore. That’s what the anchor retailers are saying. Two major flooding events in five years is two times too many, they want out of that location.
“The problem is that we’re making these tough decisions after the event. You don’t want to wait for the catastrophe before you make changes. And that’s the lesson for the Gold Coast.”
Indeed, Mr Hall says it’s time for council to really re-examine what we approve and where.
And he says a good place to start is the city’s notorious “cow corner”, a 25ha proposed development site perched on a floodplain beside the giant roundabout at Nerang-broadbeach Road and Robina Parkway.
Pictured submerged under flood waters last week, the site’s 2013 development application came complete with a council mandate that there be two lifeboats, warning lights and three days worth of food rations for residents in order for any future project to go ahead.
Two years ago, site owner JLF Corporation put the project on the market after securing further approval for a $2bn mini-city featuring an 11-tower village and 1550 units and houses. Conditions for lifeboats, lighting and food rations remain. “You have to ask why would you ever want to live in a place where you require a lifeboat? It’s not the Titanic,” he says. “You can
put in all sorts of schemes to give people coverage in terms of insurance, but the harm that’s done in the weather event when you lose all your belongings, your business, or your access to the community … that’s the intangible impact.
“You have to look at these areas and ask if the land is being used for the right reasons?
“It’s not just greenfield sites but developed land as well, council buyback has to be on the table.
“I think local government should be having upfront discussions with state and federal governments in making some of these brave calls.
“You’d be mad not to sit down and think about where do we redraw the lines on risk and what does it really mean? We owe it to future generations.”
But Mr Hall says responsibility extends far beyond local government, with Gold Coast homes urgently needing state and federal funding to subsidise cyclone and flood-proofing as well as an early warning system for flooding.
He says for every dollar invested in building stronger homes and projects that protect the community, like levees, floodways and prescribed burning, the return is almost ten-fold in terms of money saved.
But right now, 97 per cent of funds spent on natural disasters in Australia go into the cleanup, while only 3 per cent is spent on prevention.
You don’t want to wait for the catastrophe before you make changes
“We shouldn’t wait to spend money cleaning up the Gold Coast when disaster hits – and it will. The Gold Coast is on the frontline when it comes to the threat of flood and cyclone. All those strata-titled apartment blocks along the beach that are 30-40 years old, that’s where it will hit.
“There is tangible action governments can take, we have to do more to reduce the risk and invest more money upfront in mitigation and resilience.
"We’ve seen this happen already in Queensland, where flood mitigation was built around the township of Roma,
premiums reduced by 30 per cent.
“We are calling for a fiveyear, $2b investment program, starting now, with $200m annual investment by the federal government and matching contributions from states and territories.
“As well as saving lives and reducing physical and mental injuries, this program would reduce financial, health and social costs to the Australian government and Australian households by at least $19bn by 2050 – a return on investment exceeding 9.6. In Queensland, a $730m investment would mean a $6300m return.
“The Victorian and New South Wales governments have recently increased resilience funding. However, Queensland – which faces the most significant threat from cyclone and cyclone-related flood – needs to significantly lift its investment.”
According to a 2021 report by Infrastructure Australia, the Gold Coast is the most at-risk location for escalating insurance costs linked to fires, soil erosion, beach erosion and inundation from rivers and oceans.
Mr Hall says funding permanent preventative measures is the only weapon to fight rising insurance costs.