When Austin Gregor opened his insurance renewal statement this month, he expected his premiums to skyrocket, but he never thought it would hit $20,000.
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“It was really quite a shock,” he said.
His home in North Wagga Wagga in southern NSW is in a flood risk area and has been subject to multiple emergency warnings and an evacuation order over the past six months due to flooding of the Murrumbidgee River.
He said he knew he’d pay more given recent events, but called the hike from $1,800 to $22,000 “unaffordable.”
The same increases are being seen by other flood-affected homeowners across the country.
Valerie Myers’ home in Echuca was hit by major flooding in the town on the NSW-Victoria border.
As she struggled to protect her home from the floods, her Westpac renewal arrived in the mail. She had more than tripled.
“We were devastated, absolutely devastated,” she said.
“To get that, it was just another kick in the gut.”
Her house and content package went from about $2,000 to more than $7,000.
Other residents in flood-hit areas, including Barham and Moama in south-west NSW, said their insurance had also risen by similar amounts.
No opt out
Mr Gregor and Ms Myers said they had attempted to opt out of flood protections, which accounted for most of the increase, but Westpac confirmed it was required in all budget guidelines.
“They actually put you over a barrel,” Ms Myers said.
Mr Gregor said when he tried to look around other companies either refused to offer insurance or quoted as much as $38,000 for the same coverage.
As with many homeowners, insurance is a requirement of Mr. Gregory’s mortgage.
“I think the situation now is that we have a choice of either paying what I would call prohibitive insurance costs or possibly not being able to insure our home at all,” Mr Gregor said.
Westpac said its insurance was issued by Allianz, which took into account factors such as extreme weather events and updated flood risk models when pricing it.
call for change
Ms Myers said insurance companies need to offer more transparency and flexibility.
“Something has to be done. The government may need to intervene. I don’t think it’s fair,” she said.
Mr Gregor said he was concerned about how the price hikes would hit other, harder hit areas such as Forbes and Eugowra in central west NSW.
“How are they ever going to afford to insure their homes when this happens with every high tide?” he said.
Insurance Council of Australia chief executive Andrew Hall said government intervention would only “mask the risk” and said the real focus must be on rebuilding in safer areas.
“In Riverina and Central West, we’ve seen the flood problem develop quite dramatically and tragically,” he said.
“Ultimately, insurance premiums will increase until we can eliminate some of these risk factors, particularly in the most vulnerable areas.”