Scott was paying nearly $4,000 for home and contents insurance. Now his insurance company is abandoning him
When Scott Hinks's insurer told him his home and contents cover would not be renewed, he had an instant physical reaction.
"You lose probably 50 per cent of your saliva and your heartbeat goes up to Ironman-type levels," Mr Hinks said.
"You think about your family, you think about your livelihood, but you've got to really think about the castle, which houses all that."
Mr Hinks's castle is a two-storey brick home in Windsor, in Western Sydney. In July 2022, during the last big flood to hit the area, the water swallowed his steep backyard and pool but peaked just shy of his house.
"I'd never seen so much water. The water, it's not stagnant. It rolls in and drags needles and drags vermin, drags rubbish. And there's nothing you can do. You can only sit and watch it and watch it destroy your property."
In 2020, Mr Hinks paid $1,216 for his home and contents cover. That went up to $3,953 per year last October after the floods, and now his insurance company says it will no longer offer him cover.
That's what prompted the heart palpitations. He's been searching for a provider – and he's had a couple of quotes for home and contents insurance, most recently from the NRMA for $31,969 per year. He shakes his head and laughs as he points out the company has offered him a $51 discount if he pays up-front.
"Who can afford that? You can't afford that," he said.
"The average Australian who gets up in the morning, goes to work and comes home is not going to be able to look at insurance premiums of $30,000 plus."
Consecutive years of natural disasters have sent insurance premiums soaring across the nation.
Research for the Actuaries Institute has found a median increase of around 28 per cent in just one year. The co-author of the report, Sharanjit Paddam, estimates that about 1.25 million households are now experiencing home affordability insurance stress – defined as premiums that cost more than one month's annual income.
"If your insurance is going to cost you more than a month's worth of your gross household income, then we think it's very unlikely you're buying insurance," Mr Paddam said.
He said part of the big increase is explained by the higher costs of rebuilding a damaged home, due to more expensive labour and materials.
But the increased risk of natural disasters is also driving up the price.
With back-to-back years of expensive natural disasters, like the floods and the 2020 Canberra hailstorm, Australia has become a losing bet for reinsurers.
"The statistics point to reinsurers losing money the last five out of six years," Mr Paddam said.
"So they then are increasing their reinsurance costs, trying to get back on a basis where they're at least making some money out of this. Most insurers will try to pass that reinsurance cost down to whoever causing that risk."
The greatest risk in the country is in Western Sydney, where the topography has been likened to a bathtub and a catastrophic flood could cover the roof line of thousands of homes. The Insurance Council of Australia says a major flood could displace an estimated 300,000 people.
Insurers are pricing in that risk, which is why Warren and Carole Goldsworthy's home and contents premium has rocketed from $3,800 to $6,500 per year in 12 months, despite it not flooding in recent memory.
The bill was an unpleasant surprise.
"You have to have it," says Ms Goldsworthy. "You can't afford not to."
"It gives you a bit of a hit because you know, when you're earning money your money's going up," says Mr Goldsworthy.
"But when you semi-retired or retired, you're just covering costs and keeping level. But your running costs are still going up, which is really difficult at our age."
NSW Liberal MP for Hawkesbury Robyn Preston represents one of the most flood-prone communities in the nation. She says many of her constituents have been refused insurance outright, or else it's impossibly expensive.
She thinks a solution could be some kind of limited emergency cover.
"Perhaps a one-off payment of a figure that would allow people to come back into their house after the floods have occurred … [and] they can actually do a clean-up, pull out everything and then start again," she said.
"So maybe a figure perhaps $15,000, $20,000 in a recovery flood insurance premium would be great, lower premiums, but you know, a flat fee, they know that they get a premium that works for them so that they can come in and clean up afterwards."
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