I thank the Chairman and members of the committee for the opportunity to address it today on what we believe to be essential legislation. We have been dealing with this problem over the past ten years and both Houses of the Oireachtas jointly commissioned a three-year report, which was published in 2015. It is probably one of the most comprehensive studies into flood insurance. I will be using part of that report in our presentation today. I take this opportunity to congratulate the Members of the Houses who contributed to this report because it is an extremely good document and very comprehensive. A huge number of groups and stakeholders fed into it.
The Irish National Flood Forum, INFF, is a voluntary group set up by three people in Skibbereen in 2010 as a result of flooding in the town. We are a charitable organisation. We work on a voluntary basis and we try to build community flood resilience that enables communities to achieve better flood alleviation and to reach their full economic and social potential, returning hope where once there was none. We like to engage with the local authorities and stakeholders and all Government agencies in a respectful way. That is key. That is our motto. That is our modus operandi.
We are going to try to paint a picture for the committee with regard to the Flood Insurance Bill 2016 and why it is needed. We will drill down into some of the figures which are widely quoted by Insurance Ireland and by different Departments. We will drill down through them and Mr. Kavanagh will show the committee exactly what is happening on the ground in towns which have been flooded and in which, despite major alleviation schemes having been put in, flood insurance cannot be resumed.
The Office of Public Works, OPW, has invested heavily in new flood defences. Some €41 million was invested in Clonmel in a scheme which was completed in 2013. In Fermoy, €35 million of taxpayers' money was spent on a scheme which was completed in 2014. I emphasise that the scheme in Fermoy was tested heavily during the floods of 2015. It was shown to be extremely good and there were absolutely no flooding problems in 2014 and 2015. In Mallow, €39 million was spent in 2014. These three schemes alone amount to €115 million. In all of these towns home owners and businesses in the centres of the towns, near the rivers, have massive issues when trying to get flood insurance. It is just impossible.
It is planned to spend €100 million over the next five years. These schemes are being built to the international standard to which Deputy Michael McGrath made reference. These schemes are some of the best in the world. They are the newest schemes in the world. We have now got an agency, the OPW, which has a level of expertise. We have a flood conference in Athlone on Saturday 25 November. Experts from Holland and Scotland are coming. They have viewed these schemes and have said that they are some of the best schemes they have seen in Europe, yet we have problems getting flood insurance in these towns.
Despite such large investments of taxpayers' money, communities are still experiencing difficulties obtaining flood cover. In the schemes I have mentioned, areas remain blighted and, in some cases, insurance has actually been withdrawn after a scheme has been completed. There have been instances of people losing their flood cover after a scheme has been completed. The INFF's concern is that, while OPW schemes bring high standards of physical protection, without changes in the level of flood insurance cover societal resilience will remain compromised. The objective of the scheme is incomplete, in spite of the OPW's level of technical excellence. One of the things which we find is that there is, rightly, a huge focus on schemes. Capital works schemes are brought in. A community can wait for ten years for a scheme to be delivered but after all that time, all that level of expertise and all that money spent, it still cannot get insurance.
One of the major points we want to make here today is that there are no independent studies by Government whatsoever with regard to the level of flood insurance cover. All data that the Government is using, whether for press releases or decisions made in the Department of Finance, have not been independently verified. It is not only the INFF saying this. An Irish Examiner article of 21 August 2017 was headlined "Motor insurers investigated for possible 'price fixing'", an RTÉ report on 4 July was titled "Irish-based motor insurers raided by EU competition officials" and an article in the The Sunday Times of 2 July had the headline "Insurance firms ordered not to lie". These are not my statements, they come from very reputable media outlets which are calling into question the bona fides of the insurance industry in respect of the facts and figures it delivers. Despite this we, as a country, accept its data without independent verification. That problem must be addressed.
The INFF is concerned with property owners, farmers and small businesses. We really feel we are discriminated against. We pay our full rates, our property tax and our inheritance tax. We continue to wait for our flood schemes and when they are delivered we still cannot get our insurance back. If one has a business on which there is inheritance tax to be paid and one is in a town such as Fermoy where one cannot get flood insurance, how does one borrow the money to pay one's inheritance tax? It cannot be done. One starves one's business of capital to pay the inheritance tax or the rates, which affects one's ability to invest in one's business in the future. Home owners are unable to raise mortgages or loans on their properties or to sell them. Businesses and farmers cannot expand because they cannot borrow money to renovate.
This next point is very important. New industry and new commerce are reluctant to invest in blighted areas. If the current situation is allowed to continue, we will be looking at towns around Ireland, and indeed cities like Cork city, where we have had flood schemes delivered and we will be asking why they are not thriving. The reason they will not be thriving will be because those in the area cannot borrow money. Money is the fuel for future investment. It is the petrol in the car which drives the business. We are talking about home owners as well. There is a huge lack of housing in this country. Would it not be great if elderly people living in large houses could trade down allowing young people to buy their homes? It is obvious. We would all be for that. However there could be elderly people in Fermoy or Mallow who want to downsize but they cannot sell their houses because the young people who want to buy them cannot get a mortgage because there is no flood insurance.
Insurance refusals are a huge issue and they are not based on science. Through the catchment flood risk assessment and management, CFRAM, study, Insurance Ireland is, quite rightly, getting information from the OPW. There is an exchange of information which we would hope would lead to a building of trust but also to an expectation that insurance companies will play their roles. They are not playing their roles however. If one lives less than 500 m from a river it does not matter whether there is a scheme in place, no matter how strong. The companies will refuse cover. No account is taken of topography. There could be a river 100 yd. from one's house and, despite the house being 100 ft up a hill, one will be refused cover. Little or no account is taken of new flood defences.
I will move on to the lack of transparency. While we are talking about lack of transparency I will be referring to the document on slide 6 a lot - the 2015 report of the Joint Committee on Environment, Culture and the Gaeltacht on flooding and property insurance in Ireland. We have seen instances of insurance companies retaining partial claims. We have seen instances where companies have failed to advise claimants that they can appoint their own assessors. For example, if a person in Mountmellick had a problem today, the insurance company would appoint its own assessor but would not necessarily tell the individual affected by the flooding that his or her policy gives him or her the right to have an assessor appointed on his or her own behalf. The company would not tell him or her that, which is a breach of consumer protection rights.
These concerns are echoed in the report, which I would encourage all members to have a look at because it is a fine piece of work. I am afraid, however, that it will be left on a shelf and not dealt with. The report of the Joint Committee on Environment, Culture and the Gaeltacht on the 2015 study, this three-year study into the lack of flood insurance, states "If, after examining the various models, no adequate solution can be reached, the State could consider the merits of introducing legislation that would compel insurance providers to provide flood insurance to everyone." That is stated in the document.
After the three-year study, the committee came to that finding. The work on this started in 2012 and it was published in 2015. It is now 2017 and the situation has not improved in the town centres. That is why we need Deputy Michael McGrath's Bill.
The Irish National Flood Forum, INFF, contends that all potential solutions have been exhausted. The report was comprehensive and three years in the making. It has been published for two years. The OPW's best effort to deal with this issue through the memorandum of understanding process is in operation for more than three years.
The 2015 joint committee report noted the OECD recommendation that it is important to identify uninsured populations and sectors of the economy which are financially vulnerable and assess the reasons they lack insurance. That has not happened.
Ms Josephine Feehily, former chairperson of the Revenue Commissioners, at a hearing of the Committee of Public Accounts on 21 February 2013, said that "flooding will impact on property tax valuations". This represents potential loss of income to the State when it comes to the next self-assessment for property tax, with those affected by flooding putting in lower valuations.
Mr. Eamonn Downey, former chair of the Irish Claims Consultants Association, asserted in the 2015 joint committee report that there was a lack of transparency. He alleged insurance companies retain part of agreed claim settlements incorrectly. The retention practice is not evident abroad, in Belfast or Bristol. Mr. Downey also alleged insurers have ignored the consumer protection code by not advising home owners who notify a claim of their right to retain their own representative. This was confirmed by a Central Bank investigation of insurance companies. When it reviewed 188 flood claims, it found incidents of potentially unfair settlements, a lack of transparency by insurance companies with retaining partial claims, and a failure by insurance companies to advise claimants that they could appoint their own assessor.
Kildare County Council stated in this report that, despite the council having delivered a scheme, insurance is still not available in that area. The Society of St. Vincent de Paul is not a commercial enterprise but one that understands people living in disadvantaged areas. Its representative, Mr. Brendan Dempsey, told the committee that the society believes the lack of flood insurance can only be addressed through legislation. The Irish Brokers Association reckons up to 50,000 households have no flood insurance, despite this famous 98% statistic being trotted out by insurance companies regularly.
One of our member groups in Ballinasloe, County Galway, carried out a local audit on a flood relief scheme in Derrymullan where €1.2 million was spent on flood defences in 2011. Out of 130 houses, our member group found 60 homes still without flood insurance. The committee can see in the presentation a picture of the flood defence walls. It has no demountable barriers on it and it has only one gate at a stage along the wall. That wall has protected Derrymullan since 2011 and there has never been a breach. However, in 2017, 60 home owners still cannot get flood insurance there.
I plead with Members to support this Bill as it is badly needed.