Dáil Éireann Debate, Thursday - 23 November 2023
103. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will consider establishing a national flood insurance company to cover flood damage costs especially when so many homes and businesses are unable to obtain flood insurance; and if he will make a statement on the matter. [51209/23]
View answerThe current Government policy in relation to flood insurance coverage is focused on the development of a sustainable, planned and risk-based approach to managing flooding. Preventing flooding is the best approach to reducing flood risk and maximising flood insurance capacity.
Accordingly, €1.3 billion has been committed to the delivery of flood relief schemes over the lifetime of the National Development Plan to 2030. This will protect approximately 23,000 properties across various communities from river and coastal flood risk.
This investment is complemented by a Memorandum of Understanding (MoU) between the Office of Public Works (OPW) and industry representatives, Insurance Ireland. This engagement provides for the exchange of data in relation to completed flood defence schemes which should, in turn, provide a basis for the increased provision of flood insurance in these areas.
Arising from this approach, data indicates that average flood insurance coverage levels here are higher than across the EU, and has indeed increased since 2015. However, it is acknowledged that some households are still experiencing difficulties, particularly in areas with demountable flood defences. These are systems which require human intervention in terms of their deployment.
In terms of reforming the provision of flood insurance, it is important to acknowledge that the provision and pricing of insurance is a commercial matter for insurers, based on an assessment of the risks that such companies are willing to accept. Under the EU Solvency II Directive, neither the Minister for Finance, nor the Central Bank of Ireland can compel insurers to provide such cover.
Legislating for compulsory cover was an option considered by the Department of Finance in its review of policy in relation to flood insurance in 2016, and the ‘Public Consultation on Climate Change and Insurance’ in 2019. It was then found that such an approach would have limited impact on the availability of flood cover, as it would result amongst other things in: insurers pricing prohibitively for high-risk properties; an increase in the pricing of low-to-medium risk properties; and the risk that insurers decide to withdraw from the market.
This is a complex area involving different stakeholders, often with competing objectives. It is likely that the OPW will continue to utilise demountable defences in certain circumstances while insurers will continue to maintain their reservations. However, it needs to be acknowledged that a trade-off can exist between the installation of demountable defences on the one hand and the provision of flood cover on the other.
I acknowledge the important role that the insurance market can play in managing society’s risks. Surveys from the Central Bank of Ireland and industry indicate that the majority of property policies here included flood cover. These policies have ensured that a significant amount of people have been adequately compensated after a flood event. Industry data for the period 2000-2018 indicates that insurers paid out in the region of €1.6 billion for flood, storm and freeze weather events, compensating insurers for associated property damage in Ireland.
Finally, please be assured that Government will continue to engage on all aspects of insurance reform, including flood cover issues, and that every effort is being made to encourage a responsive approach from the insurance industry, particularly in light of recent events. Minister of State Carroll MacNeill T.D. will be meeting with the CEOs of the major insurers later this month and will be pressing them to deal with their affected policy holders, fairly and efficiently and in-line with the Central Banks consumer protection code.
