Meet the residents whose experiences illustrate why flood insurance isn’t the answer to their low-lying town’s misery

By John Deex

Gai Taylor’s North Lismore home stands six metres above the ground, high among the trees, on telegraph poles, just metres from the muddy waters of Wilsons Creek.

The house dates back to the early 1900s. It was already attached to thick wooden poles when Gai bought it in the 1980s, but after a flood in 1989 she had it raised further, in accordance with council requirements.

Gai had been through several floods before the February/March 2022 event, and the 1974 flood is the stuff of legend. Markers are placed throughout Lismore, and you have to crane your neck to look at them.

Record-breaker: 1974 flood markers were more than 2m under water last year

Last year’s flood cleared those markers by a remarkable 2.29 metres, at 14.4 metres above sea level.

“The water was 1.6 metres above my floor,” Gai tells me, pointing to a level just below her head. “It was like a tsunami. Every flood is different, but this one was very different.”

Gai says she “knew I was cooked” as she watched the news and weather reports the night of Sunday, February 27, because a sequence of previous La Nina weather systems meant the ground was already sodden.

“There was no ‘give’ in the system so the rain that fell just became floodwater. I spent most of the night putting what I could into the ceiling.”

The next day, when the storm hit, the water reached her balcony’s railings, and she left.

The flood receded quickly enough for her to begin the clean-up two days later. Mud was everywhere; ruined possessions were tossed over the balcony. But friends, family and local businesses all helped to make her house liveable again by May.

Gai doesn’t have flood insurance. After a major flood in 2017, which stopped well below her building’s floor level, her home and contents premiums increased from $2800 a year to $27,000.

Because she wasn’t insured, Gai, along with many others, qualified for $20,000 in government aid.

Flood insurance in Lismore – or the lack of it – is a big talking point, as it should be in a town that’s built on a floodplain.

Where people had flood insurance, repairs in some cases are well behind where they should be, thanks to the regional scale of the disaster, a national shortage of tradespeople and availability of building materials. However, the Insurance Council of Australia says more than 80% of claims from the catastrophe have now been closed.

Even that milestone causes tensions. Lismore Mayor Steve Krieg highlights an issue that often arises after large-scale catastrophes: things don’t get fixed all at the same time.

“Frustration comes into it when you have two houses side by side and one insurance company has settled their claim and another one hasn’t.”

On the up: a recently raised property in Wyrallah, just south of Lismore

Like many Australian centres, Lismore was built where it is because people needed the river. It lies on a vast and fertile floodplain formed by a complex of waterways draining a large catchment area. Since 1850, it has been flooded 150 times. Thirty-three of those are listed as “major”.

The town grew alongside the timber and farming industries, and is now home to about 28,000 people.

Solutions have been proposed from time to time, like excavating river bends to speed the exit of floodwater. A one-in-10-year flood levee was built in 2005 to protect the CBD. However the 2017 flood saw the levee overtopped, with trapped water causing even more damage.

There have been other band-aid solutions, but they won’t fix the problem. Many experts believe the best solution would be to move Lismore’s CBD to higher ground.

The New South Wales and federal governments have launched an $800 million buyback and build-back scheme under the Resilient Homes Program, which will offer eligible applicants a buyback proposal.

Approved homeowners could also be entitled to funds of up to $100,000 for home elevation projects and up to $50,000 for the implementation of flood-resilient designs to their property.

But critics say the number of homes moved will not be enough, and the scheme’s slow progress is holding up insurance claims.

Residents also fear offers won’t be enough to enable them to purchase a property above the flood line. Gai Taylor is one of the many homeowners who have applied for an assessment, having decided that she can’t put herself or her family through another flood.

Cr Krieg agrees that the buy-back scheme has been “too little, too slow”. He understands that uncertainty over the scheme is holding up some insurance claims, but hopes more clarity for residents is on the horizon.

He also tells Insurance News that many residents believe those who were without flood insurance are better off because “they could have got a lot more done in the last 12 months.

“There are so many delays. I get it – unfortunately, Lismore was not alone in this. Every resource is stretched, everyone is under pressure.

“But some people with insurance are sitting in homes that haven’t had any work done to them.

Time to leave: the scene from the back of Gai’s house as waters rose

“Meanwhile, the Government rolled out financial assistance to homeowners, so those people without insurance just got on and got stuff done.”

For some residents who did have flood insurance in place, it has undoubtedly been a long and challenging process.

Last year’s catastrophe across NSW and Queensland is the most expensive insurance event on record, with losses totalling $5.81 billion. Insurers were swamped by more than 240,000 claims.

Insurance Council Chief Executive Andrew Hall said last year that insurers were “absolutely at capacity” and flood rebuild times had “blown out to 14 months”.

Michael Wood is a floodplain management expert who carried out due diligence before purchasing his property in East Lismore.

“Our floor level was 2m above the one-in-100-year flood,” he tells Insurance News. “The property was going up a hill, it was on red volcanic soil, so we bought it.

“Lismore has been through quite a few floods and risk maps showed they didn’t go anywhere near our place. We’d done our homework.”

But this flood didn’t follow any rules. Michael ended up with almost a metre of water in his house, “which is enough to ruin everything”.

“My friends say, ‘you work in flood mitigation and you bought a house and it flooded?’ Yes, I can see that. But nothing could prepare you for this flood.”

He had flood cover, and lodged a claim three days after the event. His contents settlement was paid out quickly, but some work on the house is still outstanding, and he’s not back in his home 14 months later.

Michael is thankful that he’s insured, and says his insurer has not disputed coverage and staff have always tried to help.

But he has mobility issues, and his temporary accommodation ran out after 12 months. There was no offer to extend it, he says, and now he’s staying with relatives.

“What happens when the temporary accommodation runs out? Well, it runs out. Fourteen months of living like a nomad out of bags takes its toll, and there were times when I wondered whether I would have a roof over my head. That’s a scary feeling.

“But I’m still better off than a lot of people. We’ve all been very polite. One lady from the insurance company said ‘you’re the first person today that hasn’t screamed at me’. They are not there to be screamed at.”

habib house

Lucky to be alive: South Lismore resident John Habib

Well-known South Lismore couple John and Elsie Habib barely escaped with their lives, after being rescued by boat in the middle of the night with water almost up to their roof.

The property was insured for flood, but John isn’t content with his settlement.

The couple were anxious to return to their home as soon as possible because it was being repeatedly targeted by vandals and looters. With this in mind, they agreed a settlement figure early, but John now believes this will fall well short of covering the work that is required, and his sum insured was more than three times the amount that was paid out.

However, his insurer has agreed to continue covering him for flood, at the same price as before.

The Australian Financial Complaints Authority says it has received more complaints about the flood catastrophe than any other disaster apart from covid. More than 2000 complaints have been lodged and 1328 closed to date – 74% by agreement or in favour of the insured.

Cr Krieg is critical of insurers’ approach to local businesses after the flood, accusing them of over-reacting to a record event that he says is unlikely to re-occur any time soon. With climate change becoming ever more violent, the experts might dispute that.

He says many businesses have not been able to source new flood cover, even if they were covered for last year’s catastrophe, and this is holding up economic recovery.

The Insurance Council accepts that flood cover can be unaffordable for many in high-risk areas, but says the premiums simply reflect the high level of risk.

Further mitigation measures are being investigated, and Cr Krieg hopes with the correct work there will be no need for a larger-scale relocation of Lismore.

Had enough: some Lismore residents can’t face another flood

“Finally after 60 years of asking we’ve got a CSIRO study being undertaken to be able to mitigate the floods in the whole region,” he says. “That could make Lismore an insurable proposition again. But that’s years away.”

The Federal Government has launched a $10 billion cyclone reinsurance pool to reduce insurance costs in northern Australia, and Cr Krieg believes it should be expanded to cover flood risk more broadly.

“I don’t know what the answer is, but we need help from someone to kickstart the economy; and insurance is key to that.”

Residents remain unsure what the future holds. They agree that the flood was unprecedented in modern times, but fear that climate change throws everything into question.

“Planned retreat would be good,” Michael Wood says. “But it’s easy to say. A lot of people don’t want to leave.”

Gai Taylor says “there is no flood mitigation except building a giant wall which will stop that amount of water. I believe it will happen again. Our weather patterns are becoming more extreme.

“I think there is a tendency for human beings to think we can manage our way out of things, but sometimes we can’t.”

When insurance works

On the coast some 30km from Lismore, Ballina residents Terence and Margaret Hamey were stunned when their beloved home was swamped by floodwater in March last year.

“At Ballina the river has never broken its banks, ever,” Margaret tells Insurance News. “We never thought we would be flooded.”

But the Hameys had insurance, including flood cover, after 54 years with NRMA Insurance.

Even though only a few inches of floodwater made it inside the home, a second flood delayed repairs to the property and mould took off. This meant every item of mould-affected furniture had to be thrown out, and the house had to be gutted.

“All the plaster was pulled out up to the second sheet,” Margaret said. “All the tiling, all the floors. You could stand at one end of the house and see all the way through to the other.”

Back on their feet: Terence and Margaret Hamey are thankful for insurance

The Hameys spent most of 2022 in a bed & breakfast, with their undamaged items in storage – all paid for by the insurer.

With the help of family the couple was able to complete a room-by-room spreadsheet of damaged items. “It just made it so easy to work through, and on contents they paid every cent of what we claimed.”

On the building, the Hameys signed off on a scope of works early, and were able to make some improvements to what they had before.

There were some delays in the building work and the couple was not able to return home until November. But they feel very lucky and thankful to their insurer.

“It was a very traumatic experience but it just made it so much better for us, dealing with people who are listening to what you are saying and doing what they can to fix whatever needs to be fixed.”

Gutted: almost every item of furniture touched by the flood had to be thrown out