Residents living several kilometres from River Murray refused insurance because of embargoes imposed on entire postcodes

This Adelaide Hills couple have lost the postcode lotto – they live 20km from the Murray, on the side of a hill in Rockleigh – but their insurance company has refused to renew their policy.

Homeowners living kilometres from the River Murray, who are not at risk of having their properties flooded, have had their home insurance premiums substantially jacked up or been barred from taking out new policies because of blanket restrictions imposed by providers.

In postcodes along the river, insurance providers are enforcing “embargoes” – a practice that typically prevents customers from buying new policies during bushfires or floods, or when such events are likely to affect their area.

Generally, existing policies can be renewed but insurers will not allow changes to coverage.

Postcodes currently affected by embargoes stretch the length of the river, from the Victorian border through to Lake Alexandrina.

The state government has taken a firm stand on the issue, declaring that a property’s postcode should not be used as an excuse by “opportunistic insurers” to slug Riverland residents with higher premiums.

Peter and Linda Medhurst live in the Adelaide Hills at Rockleigh, which sits in the large postcode area of 5254, along with river towns including Murray Bridge and Mypolonga.

But Mr Medhurst said their home was about 20km from the river.

“I’m on the side of a hill … we’ll never get flooded unless the ice caps melt,” he said.

Rockleigh residents Peter and Linda Medhurst have been barred from buying home insurance because of an insurance embargo that has been applied to their postcode. Picture: Dean Martin

However, after letting their APIA insurance policy lapse two months ago following years of continuous home and contents insurance, he said he had not been able to renew the policy because of an embargo on the postcode.

“Our main danger is fire so now we’re into fire season and I’ve gone to follow this up but, unfortunately, with all the big companies, you can’t get through to anyone to even be able to have a discussion to ask whether they can do a simple assessment on the individual property,” he said.

The only company willing to provide insurance was an underwriting agency, but Mr Medhurst said he was quoted $3500 for the year — about triple the cost of his previous policy.

A spokesman for Suncorp, the finance giant behind APIA, said: “We are constantly reviewing areas that are temporarily embargoed and aim to lift restrictions once the imminent flooding threat has passed”.

Bill Maniatis lives on the highest road in Renmark but, in a renewal notice recently issued by Budget Direct for his home and contents insurance, he found the price of his policy had risen from $2206 to $3603.

He checked other providers, including RAA, AAMI, Coles, Woolworths, Allianz and SGIC, but found that all had imposed an embargo.

“I see this as a blatant cash grab by insurance companies,” he said.

In a statement, a spokesman for Budget Direct said although he could not comment on an individual customer’s circumstances, the rise in premium was likely due to models that assign a higher risk of flood in that area.

“This is corroborated by the recent River Murray inundation maps published by the South Australian government, which include considerations for related waterways such as Bookmark Creek,” he said.

Treasurer Stephen Mullighan said the state and federal governments expected insurance companies to focus on helping policyholders get the support they needed.

“While properties located in flood-prone areas are likely to have higher premiums, this should not be used as an excuse by opportunistic insurers to slug Riverland residents that live in the same postcode or local government area higher premiums if the actual risk of flooding is lower for those specific properties,” he said.

Mr Mullighan said regulation of the insurance industry was a federal responsibility, and evidence of predatory or illegal behaviour should be reported to the Australian Financial Complaints Authority.

The Insurance Council of Australia said embargoes were lifted by insurers when the threat of a disaster passed.

“The Insurance Council encourages policyholders to buy cover well in advance of disaster season and to shop around to find a premium that suits their particular circumstances and budget,” a spokeswoman said.

RAA Insurance chief product and pricing officer Shaun Ryan said RAA had been helping residents in embargoed postcodes on a case-by-case basis.

“If an RAA member’s property is not considered a flood risk in one of the currently embargoed postcodes, RAA Insurance will work with members to provide cover and allow alterations to existing cover.

“This is being managed on a case-by-case basis, and we’ve been helping several members who fall into this category.”