Budget Direct cancelled Forbes woman’s insurance before floods

NSW flood victims are being forced to pay for their own clean-up and repairs after being abandoned by insurers the Insurance Council of Australia denied were leaving vulnerable customers in the lurch.

For years Budget Direct was happy to take Lisa Madden’s money for home and contents insurance that included flood protection — until it suspected she might actually use the cover.

On May 2 this year, Ms Madden received a letter at her Forbes home from Budget Direct which began: “Hi Lisa, we’re unable to renew your policy this year. The letter will explain why.”

The letter explained: “In this case, the insurer has reassessed the flood risk of the property. Your address now falls outside of our risk assessment criteria, so we’re unable to offer you cover.”

The policy had four weeks left to run. Ms Madden had never made a claim of any type.

Budget Direct suggested she “look to purchase insurance from another insurer before this cover ends.”

But Mrs Madden found none was issuing new policies that included flood protection.

Six months later, Forbes was flooded, her now-uninsured home was inundated, and she faces a massive repair bill.

Lisa Madden is still clearing up in the aftermath of the Forbes floods. Picture: Justin Lloyd

As previously revealed by The Daily Telegraph, a specialist extreme weather forecasting firm that provides services to insurers had recommended a ban on the Central West town of about 9000 people.

In between mopping up remnant mud from last month’s flood, Ms Madden yesterday said: “We think we are insured and that we are safe and then they just take the cover away. Something needs to be done so that this doesn’t happen in the future. Are they going to pull out of providing bushfire insurance in hot summers?”

Ms Madden’s home during the floods. Picture: Supplied

Budget Direct is part of foreign-owned Auto & General Insurance, based in the tax haven of Guernsey, in the British Isles.

Auto & General’s Australian unit took in $1.7 billion in premiums last financial year, up more than 20 per cent on the previous 12 months.

Last month, The Telegraph revealed insurers were abandoning towns such as Forbes, which had repeatedly bounced back from floods since being established in the mid-1800s.

The Telegraph reported residents had received letters saying their cover would not be able to be renewed.

After the Telegraph story, Insurance Council of Australia CEO Andrew Hall told ABC TV: “I spent a lot of time yesterday out in the Central West. I spoke to all the major insurers. No one is currently issuing these notices of decline to renew.”

Mr Hall said “people were getting a little bit confused.”

He was not available for comment yesterday.

Ms Madden could not find insurance …

… after Budget Direct dumped her in May. Picture: Supplied

But in a statement at odds with his earlier remarks, an Insurance Council spokeswoman said it was “aware this customer’s insurer declined to renew this policy in May”.

“Insurance prices risk and unfortunately this property sits within an area of Forbes designated as a very high risk of flood. Insurers continue to support customers above and beyond the terms of their policy,” she said.

The Telegraph asked Budget Direct to cover Ms Madden as if she was still a customer. It declined.

Auto & General’s chief growth officer Jonathan Kerr said: “As part of our normal underwriting processes, we receive updated flood mapping data from several sources.

“These updates can lead to a small percentage of addresses changing from acceptable to no longer being acceptable.”

RECOVERY GRANTS DIVIDE NSW INTO HAVES AND HAVE-NOTS

If Ron Spice’s business was in Lismore, it would be eligible for up to $200,000 in government assistance to help get it back on its feet after the recent floods.

But because it is in Forbes, he’s received $1000.

That doesn’t go too far toward his repair bill and related losses, which he estimates at between $300,000 and $500,000 after the flood waters came in so fast last month there wasn’t time to get everything out of harm’s way.

Ron Spice has only received $1000 of assistance for his flood-affected business in Forbes while similar businesses in Lismore have received $200,000. Picture: Justin Lloyd

Businesses in eight northern NSW local government areas hit by storms and floods in February and March have been able to apply for a substantial medium-size business grant.

The six-figure grant is just a dream for Mr Spice, his son Michael and grandson Anthony who also work in the car dealership.

Sitting at a desk donated by people in West Wyalong, Mr Spice told The Daily Telegraph: “We would have been the worst-hit business in town.”

Speaking of his recent dealings with government agencies, the 84-year-old said: “They come and see you and they talk to you. You say ‘can you do anything?’ and they say ‘no we can’t’.”

Frank Spice Nissan — which is named after Ron’s father and has been on the same site for 57 years — is not even eligible for the $50,000 grant on offer to other businesses in the Central West.

That’s because Mr Spice has 23 employees. The cut-off for that assistance is 19 workers.

“There’s nothing for medium-sized businesses,” Ron said. “And we’ve been hurt.”

A Department of Regional NSW spokeswoman said “the Australian and NSW governments are committed to supporting the recovery, repair and rebuilding efforts of storm and flood-impacted regions.

“The Medium Size Business Grant was rolled out in the Northern Rivers and work is under way to understand what targeted measures are required to support the unique recovery needs of Central West communities.”

Got a news tip? Email [e-mail]