Insurance challenges: Local broker on Lismore’s flood recovery

Why don't insurers offer flood cover with a large deductible?

Insurance challenges: Local broker on Lismore’s flood recovery

Catastrophe & Flood

By Daniel Wood

Flooding continues to wreak havoc in Western Australia’s Kimberley region. Major roads and bridges are destroyed and, according to news reports, in peak areas the Fitzroy River has expanded to an enormous 50 kilometres in width.

In February and March last year, the NSW town of Lismore suffered its own devastating impacts from flooding. The whole main street was under water, including the office of Dudgeon Berry Insurance Group. The family run brokerage faced the challenge of dealing with dozens of claims – and numerous calls for help from businesses without insurance – without its office.

More than a year later, Lismore is recovering and the brokerage has its office back. However, major challenges remain and one of them is insurance. The town’s businesses, according to local brokers, face few flood coverage options because this insurance is either unaffordable or unavailable.

Berry would like insurers to do something to help.

Can insurers provide flood cover with a large deductible?

“It would be great if insurers would consider offering some level of flood coverage for commercial clients, perhaps with a larger deductible,” said Dudgeon Berry partner and broker Daniel Berry (pictured above). “I’m talking maybe $50,000 to $100,000 deductible, depending on what the sums insured are.”

However, Berry said his firm has now helped settle most of its flood related commercial and residential claims.

“We’re coming close to the finish line with respect to the claims that our office is managing with about 25% still open,” he said. The claims payments through have so far totalled $14 million.

“Many of the outstanding claims are now commercial properties and businesses, so it is hard to gauge where that final figure might end up,” he said.

Berry said he is very happy this significant sum of money is going back into the community through local trades and businesses. He said businesses are re-opening, including some new ones, and increasing numbers of people are returning to their community.

Lismore is not back to business as usual

However, it’s not business as usual. Town life, he suggested, is not back to where it was before last year’s floods.

Berry referred to Lismore’s “fabulous” annual New Year’s Eve celebrations, including an event usually hosted by local not for profit, The Tropical Fruits Inc.

“Their annual NYE event  usually attracts thousands of travellers from around Australia and the world and injects a lot of funds into the community,” he said. This year, he said, the event was cancelled due to low ticket sales and rising costs.

Berry’s insurance customers and business colleagues are still facing serious challenges too.

“It’s a bit of a mixed bag of requirements,” he said. “Some are struggling with trades, while others are becoming frustrated with the slow rollout of government support or direction.”

Others, he said, are still unsure about whether to rebuild or move.

“With no clear direction, it can become hard for some to make decisions on what might be best,” said Berry.

In light of the difficulty finding any affordable commercial flood coverage, Berry is looking into parametric insurance offerings to provide some options for clients.

Lismore residents still live in their cars

In June, Lismore City Council released its Flood Response report. The report estimated the cost of rebuilding at close to $1 billion. In a media release, general manager John Walker said the report would be used to lobby state and federal governments for financial assistance “to rebuild Lismore better than before.”

The Council’s discussion paper recommended “a planned retreat” from the town’s highest flood risk areas and a government funded land swap to allow residents to move to higher ground but remain close to existing social networks and jobs.

In October, the NSW government announced the start of voluntary home buybacks through the Northern Rivers Reconstruction Corporation.

“Around 2,000 homeowners in flood-prone areas of the Northern Rivers of New South Wales will now be eligible to raise, repair, retrofit or have their home voluntarily bought back, as part of a new $800 million program,” said the government release.

However, a couple of weeks ago, Lismore mayor Steve Krieg told Sky News that some local residents were still “living in their cars” 10 months after the floods. “Some people have moved up to 20 times,” Krieg told the news station.

“We’ve had over 200 privately owned sites presented to the Northern Rivers Reconstruction Corporation for potential development,” said the mayor. He said, to the best of his knowledge, not one has been examined.

According to the Insurance Council of Australia (ICA), the total claims cost of the flooding that struck SE Queensland and NSW in February and March last year is $5.65 billion. Almost 70% of claims are now settled.

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