“Red rag to bull”: Insurance company takes advantage of Southbank’s flood mapping

In 2023, Southbank resident Roy Byrnes was knocked back from receiving contents insurance for his Kavanagh St apartment.

The insurer Budget Direct informed him that they were not willing to renew his policy due to flood risks, which left Roy baffled, given that he lives on the 27^th floor.

“If the flood ever got to my contents, Melbourne would have a much bigger problem than my carpet being destroyed,” he told Southbank News.

“I’ve been here nearly 10 years, and people are always talking about how Southbank will flood one day, but it hasn’t happened in my time.”

In Budget Direct’s response to Roy, they said, “We assess risks according to a range of data sources. The data and our methodology are updated periodically to reflect our improved understanding of the risk.”

According to the City of Melbourne, Southbank is a flood-prone area due to its proximity to the Yarra River.

Just last month, Melbourne Water refused to support LAS Group’s proposal for the high-rise at 36-42 Clarke St, Southbank, due to flood risk. The developer was subsequently not granted a planning permit.

However, while Roy acknowledges the potential for flooding due to the Yarra, he is concerned that the area’s flood risk unfairly hinders residents’ ability to obtain insurance.

“It’s like a red rag to a bull,” he said. “You know the insurance companies will get hold of it, and it’ll become even harder to insure ourselves.”

Roy decided to move on from Budget Direct and found an insurance company willing to cover his property. Their policy did, however, include “flood cover”.

A Budget Direct spokesperson said, “All of our vendors’ models indicated that this property is located in an extremely high riverine flood risk area.”

“Based on this rating and our underwriting guidelines, we determined that this location posed an unacceptable risk for both Home Building and Contents insurance,” they added.

The Budget Direct spokesperson acknowledged that many apartments in the complex where Roy lives are above ground level, and that the contents within them may not be directly exposed to flood risk. However, they noted that they also consider potential risks to other parts of the building.

“Many buildings, including high-rise apartments, may have basement storage or below-ground levels that could be affected by flooding,” the spokesperson said.

Budget Direct’s flood rating system considers ground-level risks, as currently there is no national database that captures elevation or specific details about individual apartments or storage areas.

In Roy’s case, his storage cage is on the second floor, and he believes it has no immediate flood risk.

For David Hamilton, president of Southbank 3006, flood risk is a serious issue that could significantly affect residents in the years to come.

“If you talk about Southbank being a flood-prone area, that language gets picked up and used inappropriately,” he said.

Mr Hamilton would like to see the City of Melbourne and the City of Port Phillip work closely with Melbourne Water and insurers to ensure that decisions are based on accurate and fair data.

He also suggested there should be better systems in place for alerting owners’ corporations about potential events, and that those committees and building managers need to be better equipped.

According to a council spokesperson, “Council supports Melbourne Water to ensure our community and stakeholders have access to the most up-to-date flood information.”

“We continue to work with Melbourne Water and the Victorian Government to address the challenges flooding and insurance pose for property owners and occupants.”

Additionally, the City of Melbourne is undertaking further work to update flood mapping associated with the local drainage system.

To better mitigate flood risk, the council will also be upgrading a number of drainage systems in Southbank as part of its 2025–26 drainage works program.

As part of this, 100 metres of drain will be renewed along Kavanagh St, and drains will be installed on Southgate St and Alexandra Avenue.

However, while Mr Hamilton is pleased to see the council actively working to reduce stormwater flood risk, the elephant in the room remains – how its flood mapping may be “questionably” interpreted by insurers.

He believes a national database with specific details about the flood risk for each property is an essential starting point for insurers to make fair and reasonable decisions. “Every resident deserves contents insurance,” Mr Hamilton said. •