Jane Brookman says she has been punished for having the wrong postcode. Her farm cottage in the northern rivers region of New South Wales, has not been directly affected by floods or bushfires.
But, with Inverell just down the road and Lismore four hours away, it is now considered a high-risk area. Her insurance premium has almost tripled in the past three years.
“The insurers tell me that I have to insure it for over $500,000, when it’s definitely not going cost that to replace it,” Brookman says.
“My house has never been damaged. We’ve never made a claim.”
Brookman tells Guardian Australia she is now wondering whether insurance is worth the cost. It’s a discussion happening throughout regional Australia, as actuaries count the cost of worsening natural disasters under global heating.
Her monthly insurance payments have increased from $120 to $313. Her choice to live rurally, which was meant to reduce costs in her later life, is increasingly failing to deliver on its promise.
The Insurance Council of Australia (ICA) said higher premiums were the result of the industry readjusting to the new reality of more frequent extreme weather. Exactly how those rates are calculated is determined by individual insurers.
“Each insurer has their own underwriting [insuring] criteria and will use these criteria to determine the risks underlying individual policies and policy categories,” an ICA spokesperson says.
Kathy Collinson, from Wentworth in far west NSW, says many in her town had been denied insurance or had to pay enormous increases in premiums despite what they see as little tangible increase to risk.
Wentworth sits at the intersection of the Murray and Darling rivers and flooded this summer, with the Murray River above major flooding levels in December and January. It also flooded in 1956 and was protected by a dirt levee hastily constructed by Ferguson TE20 tractors, a statue of which now stands outside the town.
“No flood on record has inundated the township,” Collinson says. “We are impacted by flood but protected by a levee.”
In an article for an edition for the Australia Farm Institute journal titled Is regional Australia uninsurable?, the chief executive of the ICA, Andrew Hall, argued that government intervention including lower taxation, more robust planning codes and public investment into disaster mitigation was a necessary step to reduce premiums.
“We know that for insurers to continue to provide cover at an affordable price and for property and lives to be protected, action is required to strengthen the resilience of existing homes and communities, and we must shift our approach to what we build and where we build it,” Hall wrote.
The Burke shire council mayor, Ernie Camp, whose northern Queensland constituency is still recovering from its worst flood, says much of rural Australia could not be effectively protected through market-based insurance alone.
“If I had shares in an insurance company that covered properties in the Gulf of Carpentaria, I’d probably short my own my shares,” he says.
“If you weren’t covered under some sort of flood insurance, you’d be buying your property back every third year.”
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Camp says he would support government assistance to pay out losses in extreme weather events. But he said only better town planning, which would involve relocating people away from flood plains, would ensure the security of the region.
“We need to think of alternatives to just running to the bank, we need less red tape so we can move some of these houses up on to higher ground,” he says.
The NSW and Queensland governments announced buyback schemes in response to the 2022 floods. The federal government last year committed $200m to 34 disaster mitigation projects in regions at risk of extreme weather events, which the emergency services minister, Murray Watt, last year argued should trigger insurance companies to reduce premiums. But the industry is not convinced.
The Actuaries Institute says the average insurance losses in Australia in the past five years are far above the long-term average.
In 2020 up to 12% of Australian postcodes or approximately 7% of Australians faced pressure meeting home insurance premiums.
Their analysis shows the areas with the highest affordability risk – where the annual insurance premium would cost at least six weeks of available household income – are in northern and Western Australia.
The northern rivers is classified as medium pressure, meaning annual premiums would cost between four and six weeks’ income.
It’s more than Brookman can afford. She has been comparing quotes.
“I looked at dropping the contents from it to make it a bit cheaper, it did not make much of a difference,” she says.
“It’s the house insurance that is the killer.”