ARC Justice has urged insurers and governments to act on 20 recommendations to address insurance affordability in north central Victoria, after it sought feedback from community members following severe floods in the region in 2022.

The consumer advocate found “consistent and confronting” concerns about affordability and accessibility, with people forced to make “impossible decisions” balancing the costs of food, fuel and insurance.

“Insurance now ranges from extremely expensive to unaffordable or unavailable for many people in north central Victoria,” ARC Justice said.

“Some households can’t get flood cover, at any price. Others can only stay insured by stripping back what their policy covers.”

The group’s research report acknowledges several driving forces behind higher premiums, but flags a belief that insurers employ “postcode pricing” rather than assessing individual homes.

ARC Justice urges all levels of government to provide a safety net for people in high-risk areas, either through a government-backed scheme or subsidies to secure insurance.

Governments could provide a “bare minimum” level of cover for all households through a mechanism akin to Victoria’s transport accident charge, it says.

The report encourages the exploration of alternative insurance models, such as mutual schemes, and advises governments to consider supporting communities in collective negotiations.

Other recommendations focus on improving insurer transparency, including requiring clearer explanations of household risk, and rewarding homeowners for strengthening resilience. Steps could include government grants for retrofitting work, access to low-interest loans for low-income households, and guarantees of multiyear discounts on insurance premiums.

The report also raises the creation of a funding pool for buybacks and land swaps for high-risk properties. Governments should introduce stronger planning controls in flood zones, it adds.

ARC Justice says without changes, the divide between those who can afford insurance and those who cannot will continue to widen.

“People aren’t asking for the impossible. They’re asking for insurance they can afford, pricing they can understand, recognition for the work they do to reduce risk, information and financing to retrofit their homes, and honest choices about where it’s safe to live long term.

“They’re asking for decisions to be made with them, not for them.”

See the report here.