Insurers move to clear up flood definitionBy Elloise Farrow-Smith and Donna Harper, Tuesday April 11, 2017 - 16:06 EST
When is a storm, not a storm?
The weeks following the severe weather event, which devastated parts of New South Wales and Queensland, is not really a time to be solving riddles.
But that is the position many insurance policy holders find themselves in as they struggle through the fine print of their insurance policies.
For Merryn Edwards from South Murwillumbah, it is a straightforward answer when she is asked what was responsible for the destruction of her family's roofing and plumbing business.
"A storm, Cyclone Debbie and that storm raised the river levels which came over the levee bank, so it's definitely a storm â?? there's just no question about it, it's definitely storm damage," Ms Edwards said.
Mick William's one-man steel fabrication business is his life's work, his weekly wage, and his superannuation.
He vowed to take on the insurance company's definition of the Murwillumbah disaster after being told by his insurer that he was not covered.
"On the disaster relief website it has been declared 'flood' but you ask anyone in Murwillumbah and they say we got hit by a cyclone," he said.
"It's been declared as a flood, similarly for Lismore, but you look at the radar images, it spells cyclone and if it wasn't a cyclone, it was a damn good storm."
At the height of the storm, winds on the coast reached "storm force", according to Cape Byron Marine Rescue's recordings.
What is a flood? What is a storm?
After an unprecedented spate of natural disasters, the Federal Government introduced a standard definition of flood in 2012, to provide greater certainty for insurers and policyholders.
It applies to household and small business insurance policies.
The definition of flood is:
The covering of normally dry land by water that has escaped or been released from the normal confines of:
any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
any reservoir, canal, or dam.
Campbell Fuller from the Insurance Council of Australia said the difference between storm damage and flood damage was clear.
"The storm might fill the river, but once the river overflows, that's a flood," Mr Fuller said.
Now the Insurance Council is stepping in to clarify that for policy holders and will hold special forums in late April and early May in flood-damaged regions of Queensland and New South Wales.
Also present will be key insurance companies, Legal Aid, and the Financial Ombudsman Service.
Mr Fuller said policy holders could question the decisions made by insurance assessors.
"Consumers have many avenues to follow, the first is seek internal dispute resolution with the company and that means their claim will be assessed by a different team within the insurance company and sometimes claims are changed at that point," he said.
If the consumer is still not satisfied after an internal dispute resolution, the next step is to speak to the independent financial ombudsman service.
"It will independently review the claim and it will seek to mediate between the consumer and the insurance company, and if it needs to step in and make a determination that is then binding on the insurance company," Mr Fuller said.
The consumer could also take legal action against the company.
Who decides if it is a flood or a storm?
The Insurance Council of Australia said it was possible some policy holders on the far-north coast suffered both flood and storm damage.
Mr Fuller said specialist hydrologists could determine what caused inundation.
"They are experts at determining where water came from, when it caused damage to premises, and under some circumstances the damage may have been caused by storm water and by river water or flood waters," he said.
"But that's what the hydrologists do with those reports to the insurer and the insurer will then make that determination."
But even when granted, insurance claims wee the short-term solution to the long-term problem of natural disasters.
"Insurance is the canary in the gold mine here, insurers send signals to individuals and to government that communities are flood prone, cyclonic prone or bush fire prone," Mr Fuller said.
"Insurance companies aren't in charge of trying to prevent those disasters occurring."
Mr Fuller said there was little doubt that the flood levees at Murwillumbah and Lismore helped curb an even bigger disaster.
Many shop owners in Lismore and Murwillumbah have told the ABC flood insurance is not affordable, and can cost more than $15,000 a year.
Mr Fuller said the problem in Lismore was with a levee that could only contain relatively minor floods.
"If it had been built to withstand a one-in-50 or one-in-100-year flood event then those premiums would have been dramatically lower.
Roma in Queensland only completed a flood levee a couple of years ago and for the most exposed properties in that town premiums fell by 80-90 per cent."
"If the levee was raised and the flood data showed the risk had been significantly reduced then insurers would respond by lowering the premiums; it's a direct equation," Mr Fuller said.
"The Productivity Commission recommended the Federal Government spend $200 million a year, matched by state and territory governments on mitigation measures to avoid precisely this situation.
"Local, State and Federal Governments need to work together to protect those communities."
The conversations we need to have
That question was put to the New South Wales Deputy Premier as he visited Lismore.
John Barilaro said it was time to have a conversation about flood and disaster mitigation.
"It is governments' role both local, state and federal to prepare communities and if it is about building levees, then they are the conversations we have to have," Mr Barilaro said.
The Mayor of Lismore has already ruled raising the city's levee calling it a 'Berlin Wall', something Mr Barilaro was aware of.
"The community may not want larger levees or the sort of investment and infrastructure that could protect it, but we have to have those conversations," he said.
"I know the conversation about levees has been a big issue in Murwillumbah and there are some who don't want to see higher walls, but if that is the cost of protection maybe we need to have that conversation."
"Conversation" on disaster prevention seems to be the key word, but planning issues are also on the Deputy's mind.
"It is a zoning issue? Why have we got business districts or homes in areas that are now prone and maybe with a chance for greater natural disasters? Is there an issue around zoning? are we building things in the wrong place?"
© ABC 2017
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