Alarming trends predicted for home insurance in Grafton and Yamba


The Independent (29/05/2024, p.1) asks “Are we uninsurable?” Notable in that report was the rising costs of insurance, and even a refusal by some companies to insure at all, in some parts of the Clarence Valley. The higher costs of insurance at Ulmarra, Grafton and Yamba featured.
On the 7.30 report on Thursday 13 June this year, the ABC reported on new estimates of home flooding risk for suburbs across Australia. The new estimates come from the “Climate Valuation Group” established to help homeowners manage the physical and financial risks of climate impacts. This group is part of a wider group which also assesses risks to companies and financial institutions.

The Climate Valuation Group states that their figures were used by the Climate Council in a May 2022 report entitled “Uninsurable Nation”. That report identified electorates across Australia that were becoming uninsurable. The Clarence Valley, in the electorate of Page, placed ninth in the “Top 20 most at-risk federal electorates to climate extremes, 2030” (Table 1, p.C8).
Disappointed with a lack of policy action following the Climate Council report, the Climate Valuation Group has now disaggregated their figures from electorates to individual addresses.
How are these figures assessed?
The Climate Valuation Group assess home insurance risk using the highest emission pathway, known as the “RCP 8.5 scenario” in the Intergovernmental Panel of Climate Change (IPCC) assessment. It therefore assumes that we will not be successful in bringing down emissions from their present course or bringing about any substantial change to the climate trends, in just six years’ time.

What can be done?
Addressing the problem of high insurance costs will require a partnership of government (at all levels), insurance companies, developers, homeowners and possibly many other local groups such as those with aged care expertise, those with some knowledge of local skills in labour markets, etc.

Government: Government must help with assistance for those on low incomes to strengthen the resilience of their homes. A town with tiers of inequality should not be quietly tolerated.
Above all, governments should ban future developments on flood plains, as they keep saying they will.

Insurance companies: Insurance companies should help with advice to home-owners as to what steps they can take to lower their insurance costs. It is important that these steps are then reflected in actual charges (as opposed to ‘blanket’ charges across a given area).

Insurance companies can also innovate in the nature of the insurance they offer. In the United States for example, some insurance companies have restored profits by offering a form of “parametric insurance;” a narrower, less costly cover for a predefined event (for example, a Category 5 cyclone). Should the triggering event happen, a given sum is payable. Since this form of insurance does not involve waiting for the assessment of actual damage incurred, cash is in the hands of those insured much earlier, and when it is needed.

Developers: In the United States again, developers are thinking twice about the sort of model we see in Australia: the standard fence-to-fence single level homes with black roofs and no space for trees or vegetation offering shade, habitat, or porous surfaces. Instead, they are building three or four level high-rise, offering the same number of homes, but leaving a large area for greenery and gardens. Aside from a much-improved aesthetic, some of the ecosystem services and biodiversity formerly offered by these landscapes might be restored.

Homeowners: Clearly, homeowners must be helped with ideas and funds where necessary, to strengthen their homes against the climate impacts.

Northern Rivers Disaster Adaptation Plans. (See Clarence Valley Independent, (05/06/2024, p.15.) A coming together of all the interested parties to start talking and exchanging ideas on what can be done is not something that immediately needs large amounts of funding. And it would surely be wise to start a Clarence Valley Disaster Adaptation Plan now. Caretaker mode or otherwise, it seems unlikely to be “premature” to at least bring key parties together, especially insurance companies, homeowners, and developers, to start talking.

Dr Judith McNeill,
Lower Clarence Research Group