AS I DRIVE into the small Victorian riverside town of Rochester, a banner tied to a metal fence greets me on the main road. The banner is white and the text is written in heavy black lettering, like a desperate plea for help: Can’t do this again – Mitigate. It’s a warm November morning and the sky is a picturesque blue without a cloud in sight. It’s hard to imagine what happened here over a year ago, the ‘this’ the sign refers to. But for the locals, it’s hard to forget.  

Karen Galliker is a calm woman who greets me with a smile when I pull up to the caravan park she now calls home. There are around twelve caravans and campers sprawled across the grounds up to the riverbank; the sites fill up with travelling Melbournians during the school holidays but are usually vacant this time of year. Everyone staying here at the moment is like Karen and her husband: locals displaced by the floods. 

Karen, who is now retired, grew up on her parents’ farm nearby and has been living in Rochester almost her whole life. ‘I worked in Melbourne for a bit, but then Otto and I got married and came back here and had three daughters. We come and go, but this is our home,’ she says. Built alongside the Campaspe River, the area is no stranger to floods; parts were hit hard in 2011. Karen’s family home avoided the floods in 2011, but the flooding in October 2022 was different. 

‘We knew there was rain, we knew there was a chance of it flooding,
but we were all told that at worst it would be 100 millilitres. We were away, but we got back home on Thursday, started packing and putting things up as high as we could, and got a knock on the door at about 5 pm telling us we had to evacuate by Friday morning, so we were just madly trying to put up stuff,’ she says. 

‘We had some sandbags, but they were useless – didn’t do a thing. By the morning we had already hooked the caravan up ready to go out to Lockington [the neighbouring town] because we knew we could get out there and it was flat and the water hadn’t gotten there.’

Karen says when she woke up about 7 am she went out to the road and saw the water was rising quickly. She and Otto left immediately.

‘Otto went back in two or three days later to see if there was anything to get out; I didn’t go back. The water went pretty quickly, but it just decimated everything. We had it up to about a metre in the house. Some people had two metres in their houses. It came from a different way this time; it came from the south and the west. It was like a tsunami.’ 

FOURTEEN MONTHS ON from the floods, Karen’s composed manner as she tells her story can’t hide her frustration at how the insurers have handled the process, particularly the never-ending rebuild of her home. 

Many in the town received payouts quickly for damaged goods in their houses – but Karen was told by her insurer, Suncorp, that she had to go through her damaged property and itemise everything that was lost or destroyed. 

‘Can you imagine?’ she says. ‘A four-bedroom, two-bathroom, two lounge-room house and you have to go itemise everything you have lost? It just broke me. My daughter came up from Geelong and she sat there for two days on her computer itemising every single item I could possibly think of. We had to have a photo of everything and send it through to the insurer. It was just hideous. Then other people with different companies got paid out straight away.’ 

Months afterwards she met with a Suncorp representative who said that itemising a list of all damaged goods wasn’t necessary and organised for Karen to be paid out an estimate then and there. 

Although Karen felt the estimate was fair, the slow pace of reconstruction is the reason she and Otto are still living in their caravan. She says the builders contracted to repair her house have subcontracted most of it out to ‘cowboys’ who have come up from Melbourne – their work has little or no craftsmanship and often has to be redone by the insurers’ builders, which continues to cause significant delays. 

‘Here we are, nearly fourteen months on and still having major issues with the house, still having major issues with the builders and the tradies,’ she says. ‘They keep saying, It will be all ready by mid-December; you’ll be in by Christmas. We know that it’s not going to happen and they are just trying to smooth things over.’

After the 2022 floods, which were the worst in living memory, Karen says many people in the town have been selling their water-damaged houses and moving away. Many are afraid the town will flood again and can’t face going through the process of rebuilding just to lose everything once more. She says the mental and emotional toll this experience puts on families and relationships is just too much. 

‘Otto would have left if it were up to him,’ she says. ‘He said we can’t go through this again – and I said the same. Never again. We have lost a lot of people out of the town. The community has been amazing, but it takes its toll. It was the community that motivated me to stay; it’s home. It’s my home. [Otto] probably wishes now that we had taken a cash settlement for the house and sold up and gone. But I thought, I can’t do it just yet.’

KAREN’S EXPERIENCE IS far from unique. The 2022 floods were the worst on record for many parts of the east coast of Australia according to the Climate Council, who warn we are heading into an ‘era of climate disasters’ that we are not prepared for. How do we, as a nation, respond to the increasing frequency of extreme weather events as climate change threatens the Australian dream of home ownership that remains so deeply ingrained in the country’s psyche? Are there parts of the country where it simply isn’t safe to live anymore? And if we don’t make tough decisions about where and how we live now, what consequences lie in store down the track? 

These questions are becoming increasingly pertinent – and so far, the insurance industry isn’t offering much in the way of answers.

Damian Stock, the CEO of local Victorian community legal centre ARC Justice, says the feedback they have received from Rochester and elsewhere in the region is that insurance companies have let people down following the extreme weather of 2022. 

‘It’s fourteen months on and what we know is that some 30 per cent or more of those claims are yet to be accepted, and payments still haven’t been made,’ Stock says. 

‘The problem is we have a private market here with interests that are focused on trying to reduce the amount of claims that are paid out. So, we see lots of either offers of part payment of the claim or refusal of a claim based on allegations of pre-existing issues or even landscaping or tree-placement issues, or allegations that buildings don’t meet current codes.’ 

The Australian Financial Complaints Authority reported a record number of complaints last year, with delays in insurance claim-handling the most complained-about issue. In 2022–23 there were over 10,000 complaints to the body about delayed claims, up from 2,700 just four years earlier. 

Stock adds that people’s experiences are wildly different based on their insurer and that they have heard of many cases where insurers were offering ‘low ball’ cash settlements to flood victims to settle their claims, which were being accepted because people didn’t have the will or energy to fight for the money they should rightfully be paid.

As the number of extreme weather events increase, so too do the premiums all Australians pay to insure their homes, regardless of where they live. Research from consumer group CHOICE in 2023 found that 87 per cent of home and contents insurance policyholders had seen their premiums rise at their last renewal. Julia Davis, senior policy and communications officer at the New South Wales-based Financial Rights Legal Centre, says in some parts of the country those rises in insurance premiums have been so severe that homes are now essentially ‘uninsurable’ even if the industry won’t use the term. 

‘The Insurance Council of Australia [ICA] loves going around saying that there’s no part of Australia that’s “uninsurable”. But we would argue that offering insurance for $20,000 a year is basically equivalent to not offering insurance. It’s completely unaffordable,’ she says. ‘The industry doesn’t want to say that there’s complete market failure, but there’s a large protection gap and it’s only going to keep growing.’

Davis says studies have classified unaffordable insurance as annual premiums that are more than four weeks of gross annual income, and that in 2022 10 per cent of households fit that category. That figure rose to 12 per cent in 2023. A 2023 report by the Actuaries Institute found affordability pressures were disproportionately felt by households struggling financially in the most exposed areas of the country, predominantly flood-prone parts of southern Queensland and Northern Rivers, NSW.

‘The cost of rising premiums is only going to lead to more people being uninsured or underinsured. Right now, when a disaster happens and people are uninsured, then it is a huge cost for government and for everyone,’ Davis says. 

She points to the need to increase government investment in areas such as climate mitigation and resilience, but adds there are also measures the insurance industry could be implementing to help with the problem. 

‘There’s not going to be a silver bullet – there’s not even going to be a dozen different silver bullets – but we need to look at all these things that may help,’ Davis says. 

The CHOICE survey found that 44 per cent of policyholders would consider investing in improvements to their home to make it more disaster resilient if this led to lower home-insurance premiums. However, many insurance companies often don’t recognise or consider individual disaster-mitigation efforts – such as fireproofing or raising houses on stumps – in their pricing structures. 

The Insurance Council of Australia say anecdotally they have been seeing worsening levels of underinsurance. 

‘During 2022 alone there were more than 302,000 disaster-related claims lodged from four declared insurance events, totalling $7.26 billion. These events are still having an impact on the price of insurance for every Australian insurance customer,’ the ICA says. 

‘In addition to the impact of extreme weather events, insurance-premium increases are being driven by inflation, particularly in the building industry, and the growing cost of reinsurance, which is insurance that insurers buy.’

Tim Nelson from the Climate Council says there is a huge imbalance in the amount of data that insurance companies can access to forecast the likelihood of extreme weather events and the information they give consumers when they are making decisions about their homes. Nelson says insurers don’t pass on long-term weather risk forecasting to their consumers and don’t make their policies and the climate risks involved easy to understand so that their customers can make informed decisions. 

‘We need a central hazard-risk register,’ he says. ‘It needs to be accessible. It needs to be really easily digestible for the average home owner and for communities to understand what the risks look like to their properties.’ 

He says along with greater efforts to tackle climate change and reduce emissions, governments need to make some tough calls about funding buybacks and relocations from areas that are simply becoming unliveable. 

Davis adds that the banking sector and the role home-loan providers play in peoples’ ability to buy and sell houses is a ‘ticking time bomb’ in this discussion. 

‘People’s entire home values are going to be wiped out,’ she says. ‘If you have banks that pull out of servicing areas because they can’t be insured, then nobody can buy the home and the home has no value. It’s a real thing on the horizon that I think most people just don’t appreciate. 

‘That’s not happening now, but when you buy a house it’s a long-term decision, it’s a thirty-year mortgage. It is totally foreseeable that this will happen within the lifetime of that purchase.’

Since the 2022 floods in Victoria, NSW, Queensland and parts of Tasmania, there has been a federal government inquiry held into the insurance industry’s response. The inquiry is due to hand down its findings in September 2024, and while some changes may emerge from this, it’s unlikely the myriad of problems facing home owners and the insurance industry will be addressed. 

FAR NORTH QUEENSLAND during Christmas in 2023 was lashed by a cyclone and flash flooding that wiped out whole communities north of Cairns. In the early days of 2024, heavy rain and flooding returned to Rochester. Evacuation orders were given for the town once again – a town that was still reeling from the floods less than eighteen months earlier.

In February, I call Karen once more. ‘The floods in January weren’t that bad this time,’ she says. The water got up to the hotel in the middle of town and not much further. ‘But for the town psychologically these floods were terribly frightening, because people still haven’t gotten over it – it was like, “Here we go again.”’

She thanks me for my call and says she is busy in the backyard of her property – the home she’s yet to move back into – overseeing some repairs. She and Otto are still living at the caravan park – the promise of being ‘in by Christmas’ long gone. 

Image credit: Wes Warren courtesy of Unsplash