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Wednesday's Final Word
Australian insurers have been criticised for refusing to provide coverage to vulnerable homeowners living in the path of Cyclone Alfred.
Without warning, an insurance embargo has come into effect across hundreds of New South Wales and Queensland suburbs, leaving homeowners unprotected.
A cyclone-affected resident shared a screenshot of a rejection letter from Suncorp Home Insurance to social media on Thursday.
‘Sorry, we’re not able to give you cover,’ it read.
‘Suncorp cannot provide insurance for your suburb at the moment due to potential natural disasters.’
A Suncorp spokesperson said insurance embargoes ahead of predicted weather events were standard across the industry.
‘As is standard industry practice, Suncorp has placed a temporary embargo on purchasing new policies in postcodes at risk of TC Alfred,’ the spokesperson said.
‘Insurance is intended to provide cover for unforeseen events, and when a significant weather event is extremely likely or imminent, the event is no longer unforeseen.
A cyclone-affected resident shared a screenshot of a rejection letter from Suncorp Home Insurance to social media on Thursday (pictured)
Experts have warned Cyclone Alfred could devastate flood-prone regions across Queensland
Pictured is damage to a home in Lismore following the catastrophic floods in 2022
‘As a result, insurers may put an embargo in place to stop accepting any new business – given the elevated risk.
‘There are exceptions for existing customers in certain circumstances, such as when you are buying a home.’
The spokesperson added that ‘cyclone, flood and storm cover’ are provided under standard Suncorp home and contents policies.
The average middle-income family would lose three-quarters of its wealth if their home was destroyed without coverage, according to the Actuaries Institute.
Compare the Market told Daily Mail Australia it was aware of embargoes for some insurers in approximately 200 suburbs ‘from around Bundaberg and stretching into northern New South Wales’.
However, that figure could rise depending on Alfred’s trajectory.
‘As more information comes to hand about where the cyclone will make landfall and how it will progress, we could see more insurers implement embargoes and more suburbs could be included,’ economic director David Koch said.
Daniel Berry, partner at Lismore insurance broker Dudgeon Berry, told Daily Mail Australia it had become ‘nearly impossible’ to take out insurance for homes situated in high-risk flood areas from the firm’s panel of insurers.
Cyclone Alfred is expected to make landfall early on Friday morning as a category two
The average middle-income family would lose three-quarters of its wealth if their home was destroyed without coverage, according to the Actuaries Institute
‘Most insurers will now decline to quote – or the cost to the consumer has become unaffordable,’ he said.
‘Embargoes have been in place with most insurers since Monday. This doesn’t impact just Lismore, but all areas in the firing line of Tropical Cyclone Alfred.’
The tropical cyclone, described by NSW Emergency Services commissioner Mike Wassing as ‘three natural disasters in one’, will likely reach Brisbane on Friday.
Queensland government modelling has predicted more than half a million homes in the state’s south east could be damaged, along with many more in northern NSW.
NSW Premier Chris Minns said on Wednesday the damage wrought by the cyclone could be ‘akin to the 2022 natural disaster in Lismore’.
More than 80 per cent of homes in Lismore were damaged in the floods, forcing about 31,000 people to find a new place to live.
Following widespread reports of protracted claims processes as insurers battled to make good on their policies, many residents have since done away with their protections.
One Lismore resident said they now only kept replaceable items downstairs since cancelling their last policy due to major delays following a flood event.
NSW Premier Chris Minns said on Wednesday the damage by the cyclone could be ‘akin to the 2022 natural disaster in Lismore’ (the northern NSW city is pictured)
Insurance expert David Koch warned Aussies to assess their policies ahead of the cyclone
‘Poor people like me… if it’s a choice between food and insurance, you’ve got to choose food,’ another said.
Even those with existing home insurance policies are not guaranteed protection from the full range of cyclonic impacts.
While standard home and contents policies tend to protect against cyclones, flood and storm damage protections are often packaged as optional extras.
‘If you do have an insurance policy in place, go through it to understand what you’re covered for,’ Mr Koch said.
‘It’s also a good idea to take photographs of your property and belongings. Should you need to claim, having evidence that damage occurred during a weather event may help the process.’
Where homeowners were fortunate enough to take out policies in advance of the cyclone, some will not be afforded protections due to a standard no-claim period.
‘The no-claims period can vary from one insurer to another, and is typically 72 hours. If customers are purchasing cover now, and may be impacted by the cyclone, they should check with their chosen insurance provider before signing up,’ Mr Koch said.
Experts have warned that insurance premiums will once again rise off the back of the cyclone as risk profiles are updated.
‘What we have seen over the last few years is insurers increasing premiums to allow for the increased weather events that are being predicted,’ Mr Berry said.
