As highlighted in the Deputy's question, an indemnification scheme is one option that has been suggested for households who are unable to obtain flood cover. A key factor in any decision on this matter will be the impact on future expenditure, particularly in the current economic climate. As the Deputy will be aware the Government is considering the options open to it in order to try and address the non-availability of flood cover on a cost effective basis for the Exchequer. The costs associated with indemnification are however potentially quite high and are difficult to quantify for any particular year. However, over a period of time it is possible to say that the costs would be significant on the basis that there have been six major floods costing the insurance industry approximately 516m euro in flood claims over the 10 year period 2000-2009. These costs would be in addition to the normal infrastructure costs which arise from flooding such as repair of roads, bridges etc.
Furthermore, there exists a very real possibility that the potential costs of the scheme would increase over time because once indemnification was introduced, industry would have a strong incentive to discontinue the provision of flood cover in medium and high risk areas. This would be a serious and retrograde step in seeking to maximise the availability of insurance coverage in the marketplace. Therefore such a proposal has the potential to weaken the existing private insurance regime, thus making it more difficult to withdraw an indemnity, even if introduced on a short-term basis.
