Flood Crisis Exposes Insurance Shortfalls in NSW: Brokers Warn of Unmet Coverage Needs

1

The Insurance Council of Australia has declared the situation a catastrophe, setting up an insurance hub in Taree to assist those affected. The number of claims has already surpassed 6,000, highlighting the widespread impact. Unfortunately, many find themselves without adequate cover. Farm insurance packages generally exclude flood protection, leaving essential assets like properties at risk, despite coverage for equipment such as tractors and quad bikes.

Matthew Fawcett, a broker from Insure More, notes that regional businesses, particularly those in Taree, feel the weight of sky-high flood insurance costs. With the area worst affected by the disaster, there is mounting fear that Taree might turn into a "ghost town" if businesses retract. Fawcett forewarns that critical commercial streets might be left barren, as shopkeepers choose between prohibitive rent or persistent flooding if they return, underscoring the urgent need for flood mitigation measures like a levee on Victoria Street.

Without these protective measures, the insurers' willingness to provide cover remains low. Historical urban structures in Taree, built around waterways, heighten the risk, resulting in insurers retracting or inflating costs, reflecting the intensifying risk climate. The sentiment is shared in Maitland, where Arma Insurance Brokers' Amanda Morris recounts that many are uninsured due to the unfeasibility of flood premiums, which can soar as high as $30,000. While Maitland has avoided the worst, largely due to an intact levee, the financial burden remains severe for those gambling between economic strain and potential flood loss.

For many residents, especially the elderly in more prestigious areas, the cost of flood insurance is simply untenable, leaving them incredibly vulnerable. Morris highlights that even with unprecedented flooding levels, insurance claims remain scant, as the lack of coverage leaves residents and businesses to bear the brunt of financial damages.

The flooding in New South Wales underscores a critical gap in insurance offerings and uptake, driven by financial inaccessibility. It calls for a concerted effort towards policy reform, infrastructure improvement, and pricing revision to better shield vulnerable communities from such devastating events in the future.

Published:Tuesday, 3rd Jun 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

AFCA Upholds Insurance Fraud Ruling Over Disputed Possum Accident 26 Jun 2025: Paige Estritori A motorist's claim that he crashed into a tree to avoid a possum has been denied by the Australian Financial Complaints Authority (AFCA), which supported the insurer's fraud decision. The incident involved the driver crashing his Jeep—insured for over $20,000—on a dimly-lit street, purportedly avoiding the rain-soaked motorway en route to the store. - read more

Code Watchdog Criticises Insurer for Misleading Rejection Letters 24 Jun 2025: Paige Estritori The Life Code Compliance Committee has recently reprimanded a life insurance provider for issuing misleading rejection letters to policy applicants. These letters were deemed 'ambiguous and contradictory' and failed to clearly inform applicants of their review options after being denied coverage. - read more

Insurer Ordered to Pay Full Claim for Confusing Patio Coverage 23 Jun 2025: Paige Estritori A recent ruling mandates that an insurer must fully honor a storm-related claim due to ambiguous policy wording regarding items in open areas. The Australian Financial Complaints Authority (AFCA) determined that the insurer's restriction on coverage for items in a patio area was unfounded, as the policy's phrasing was not clear. - read more

Australia Sees Dramatic Drop in Catastrophe Losses 23 Jun 2025: Paige Estritori Last year saw Australia's insured catastrophe losses plummet to just $500 million, marking the lowest level since 2004, according to Aon's latest Climate and Catastrophe Insight report. Notably, the Insurance Council of Australia reported no disasters for the year, a situation not seen since 1982. This comes in stark contrast to 2023, when disaster-related insured losses soared to over $3.6 billion. - read more

Half a Million Australian Homes at Risk of Becoming Uninsurable, Climate Agency Reports 21 Jun 2025: Paige Estritori The Climate Change Authority has released a concerning report highlighting that, without immediate intervention, extreme natural hazards could cost Australians approximately $8.7 billion annually by 2050. The report urges the federal government to spearhead a comprehensive and well-coordinated national adaptation agenda to mitigate these risks. - read more