The issue of flood cover, its availability and its cost, is one with which I am familiar. I am also very conscious of the difficulties that the absence of such cover can cause to householders and businesses. However, it should be noted that the decision to provide any specific form of insurance cover and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved. Neither I, as Minister for Finance, nor the Central Bank of Ireland, can require a company to change its rates or prohibit a company from doing so.
An insurance company's commercial decision to provide new or renewed flood cover is based on a proper assessment of the risks it is accepting and the making of adequate provisioning to meet these risks. 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 flooding 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.
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. Because of the cost and scale of these types of flood defence works, this approach will see benefits over the medium and long term. Once these works are completed the availability of flood insurance in affected areas would be expected to increase.
The OPW and Insurance Ireland agreed earlier this week on a sustainable system of information sharing in relation to completed flood alleviation schemes and this is expected to allow the insurance industry a much greater understanding of the extent of the protection provided by flood defence works and will allow them to reflect this in the provision of flood insurance to householders in areas where works have been completed.
My Department is also undertaking a review of measures to address the availability of flood insurance cover, including the experience and proposals in other countries. In assessing these, care has to be taken that the proposed solutions do not put in place arrangements which, over time, would weaken the provision of insurance cover by the market with possible negative long-term consequences for the economy.