At the outset, it should be noted that the issue of flood cover and its unavailability in some instances is one which I am familiar with. I am also very conscious of the difficulties that the absence of such cover can cause to householders and businesses. While the lack of availability of flood insurance affects a relatively small number of people, the consequences for these people are very serious should their house or commercial premises be damaged by flooding. However, I am not in a position to direct insurance companies to provide flood cover to specific individuals. The issue of provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting.
The idea of making flood insurance compulsory has been considered. However if this was the case, it would mean that in areas where there was likely to be regular flooding, the cost of insurance would almost certainly be prohibitive and could make premiums unaffordable not just for affected policyholders but for policyholders in general.
What the Government can do to try and help those who have been affected by flooding, is try to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences as well as a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme. This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016.
In addition, the OPW and the Insurance Ireland have been engaged in discussions to agree on a sustainable system of information sharing in relation to completed flood alleviation schemes and works undertaken by the OPW or, in certain instances, by local authorities with OPW funding, and where the standard of protection afforded by these works could be verified. There is agreement in principle but with some operational details to be finally sorted by the insurance companies. The outcome of these discussions means that the insurance industry will have a much greater understanding of the extent of the protection provided by flood defence works and will therefore be in a position to provide the necessary flood cover to householders in areas where works have been completed.
The Deputy refers to the use of a reinsurance scheme whereby insurance companies could pool their flood insurance liabilities, similar to the temporary scheme in the UK known as Flood RE. However, the introduction of such a scheme would likely lead to a significant increase in household insurance premiums as those in low risk areas would be required to subsidise those in high risk areas. Furthermore , the Exchequer would also be required to provide financial assistance to such a scheme in circumstances where the claims were above the level of funds in the pool. I am continuing to monitor how the difficulties around the Flood Re scheme are being addressed in the UK.
The Government has also examined the introduction of a scheme to protect householders who cannot obtain household insurance in respect of flooding from regular insurance bodies. However, this approach has not been considered financially viable because it is believed that over time it would incentivise industry to discontinue the provision of cover in medium and high risk areas thus making the cost of such a scheme prohibitive.
In cases where individuals who are experiencing difficulty in obtaining flood insurance believe that they are being treated unfairly they can contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at (01) 676 1914 or by email at firstname.lastname@example.org.