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Towns face nervous wait as floodwater rises -

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Residents in the New South Wales town of Forbes and the Victorian town of Nathalia face an anxious
night as floodwater threatens to inundate homes.


TONY JONES, PRESENTER: As communities in New South Wales and Victoria wait anxiously for
floodwaters to do their worst, the insurance industry has officially declared the floods a
catastrophe. The Insurance Council also warns that unless more is done to prevent future flood
disasters, premiums will keep rising.

Well tonight the NSW town of Forbes is under threat and the Victorian town of Nathalia is still in

Amy Bainbridge reports.

AMY BAINBRIDGE, REPORTER: The town of Forbes in central west NSW has been cut in two. The Lachlan
River has been steadily rising, threatening hundreds of homes and businesses.

DIETER GESCKE, NSW SES DEPUTY COMMISSIONER: The predicted peak is about 10.65, and at that level
the town breaks into three.

AMY BAINBRIDGE: Further east, the fertile plains surrounding Griffith are under water. 600 people
have been evacuated from their homes. The nearby village of Yenda has already gone under.

LOCAL RESIDENT: Apparently there's one and a half - one and a quarter metres of water going past
our place today, which is not very exciting. So we're a bit worried about the effects on the house.

AMY BAINBRIDGE: And the city of Narrandera is on standby as water pours down the Murrumbidgee

The Prime Minister has visited Wagga Wagga where the levee has held, protecting the city centre
from the worst flood in decades.

JULIA GILLARD, PRIME MINISTER: Already in accordance with our natural disaster arrangements we've
triggered assistance which helps people in hardship, helps them with repairs to their homes, helps
primary producers and helps small businesses.

AMY BAINBRIDGE: The Insurance Council of Australia says Wagga's levee is a classic example of
what's needed in flood-prone communities across Australia.

ROB WHELAN, CEO, INSURANCE COUNCIL OF AUSTRALIA: The level of damage that was avoided there would
have been in the hundreds of millions probably, for the sake of a levee which probably cost tens of
millions. So it actually is a worthwhile investment, but it is an investment that government needs
to make.

AMY BAINBRIDGE: In north-east Victoria, the town of Nathalia is also relying on a temporary levee
to protect 170 homes.

ALEX MONK, MOIRA SHIRE MAYOR: It is an enormous inland sea that is moving across from the east of
our shire.

AMY BAINBRIDGE: The insurance industry recognises the gravity of the situation in two states.

ROB WHELAN: We've decided as the industry to declare a catastrophe. That means we get to deploy a
significant taskforce to be able to resolve issues quickly in the areas, so we've got staff heading
down there now, as do the insurance companies themselves, but it is very early days.

AMY BAINBRIDGE: These floods come off the back of a year which saw eight catastrophic events. The
Insurance Council says global re-insurers are now treating Australia with caution.

ROB WHELAN: They've incurred massive losses over the last 12 months and they see us as a higher
risk now. And the question they ask us in terms of their additional costs that they're pushing
through to us is: what are you doing about mitigating the risk? Now if we don't have solid answers
as to what government and the community are doing to actually reduce the risk, then the prices will
continue to rise.

AMY BAINBRIDGE: Already, 4,000 insurance claims have been submitted, but it's early days. With
damage to infrastructure, the cleanup bill could be more than $1 billion.

Amy Bainbridge, Lateline