Dáil Éireann Debate, Thursday - 20 February 2014
42. Deputy Michael McGrath asked the Minister for Finance in view of his comments the insurance industry must cope with flood insurance, his views on whether the industry is sufficiently prepared to cope with challenges associated with flooding and subsidence issues; and if he will make a statement on the matter. [8382/14]
View answerThe 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 and the making of adequate provisioning to meet these risks. Flood cover claims are generally significant and in order to provide such cover, insurance companies would say that they have to be satisfied that the potential for such floods arising is low. It is a matter for the industry to set its premiums and make provisions at the appropriate level to ensure that it can cope with flood and subsidence issues. Furthermore, as a matter of course, insurance companies carry out reviews of the risks they are prepared to insure against and sometimes make decisions to discontinue certain types of cover which they consider high risk, such as homes in an area which is prone to subsidence.
Government policy in relation to flooding aims 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 based on 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. Works are completed on a prioritised basis. Once these works are completed the availability of flood insurance in affected areas would be expected to increase.
My colleague, Minister of State Hayes at the Office of Public Works has taken the lead role in discussions with the insurance industry about improving the provision of insurance cover in areas where remedial works are being carried out and OPW is near agreement on a data-sharing platform which will facilitate the transfer of detailed information on completed OPW flood relief schemes on an on-going basis. This will allow the insurance industry to take into account the flood protection measures when assessing flood risk in localities where such flood measures have been completed.
While the agreement on the memorandum of understanding with the insurance industry is to be welcomed as a first step, ultimately, it will be a matter for the insurance companies themselves to decide how they will use the information provided on completed flood defence works but they are committing to take the information into account in their assessment of risk and it is to be expected that this will facilitate the provision of flood cover in areas that are protected by completed schemes.
