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Flood Risk Insurance Cover Provision

Dáil Éireann Debate, Wednesday - 18 May 2016

Wednesday, 18 May 2016

Questions (4)

Michael McGrath


4. Deputy Michael McGrath asked the Minister for Finance his progress in ensuring flood insurance cover is available to households in areas where remedial works have been carried out by the Office of Public Works; and if he will make a statement on the matter. [10516/16]

View answer

Oral answers (5 contributions) (Question to Finance)

The flooding crisis earlier this year has raised issues in relation to insurance and flooding and I am aware of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners. One of my primary concerns in the area of insurance is that homeowners have access to insurance to cover unforeseen losses, including flooding. 

However, the provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks. In my role as Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses.

Government policy on flooding is focused on the development of a sustainable, planned and risk-based approach to dealing with flooding problems, with a view to addressing the increased availability of flood insurance.

To achieve this aim the OPW is carrying out assessments of 300 areas under the catchment flood risk assessment and management, CFRAM, programme and each area will have a flood risk management plan, FRMP, by the end of 2016. Decisions on future investment in relation to flood risk management will be informed by the FRMPs.

This strategy is complemented by a memorandum of understanding between the OPW and Insurance Ireland which provides for the transfer by the OPW of data in relation to completed flood defence schemes to the insurance industry. 

In addition, my officials are undertaking research on alternative options with the potential to ensure greater availability of flood insurance. This will be in the form of a comparative analysis of the different approaches to flood insurance in other countries. This will then feed into a report to Government from the interdepartmental flood policy co-ordination group which is expected to be completed before the summer.

The focus of my question relates to areas where the OPW has completed flood relief schemes at great cost to the taxpayer and where insurance companies have refused to reinstate flood cover, both for homes and businesses. I know the Government met with the insurance companies in January. I understand there is an interdepartmental group due to report this month. The Minister might confirm if that is expected to happen in May. The key issue that will have to be resolved is the view that the insurance industry is taking with regard to demountable defences. We are about to spend hundreds of millions of euro as a country rolling out flood relief schemes around the country over the next number of years, which involve demountable defences that are commonly used across Europe that meet the required standard under the European Commission but which are not recognised by the insurance industry as being of the same standard as permanent fixed defences. That issue will have to be resolved. I hope the Minister can give an update to the House on that.

I think that once flood defences are put in at taxpayers' expense and they are seen to be effective, insurance cover should follow immediately.

The note I have says the insurance industry claims demountable defences and floodgates do not meet the desired one-in-100-years standard. It has highlighted that the construction of demountable defences will not increase flood coverage in these areas but rather minimise any further reduction in coverage. The OPW has advised that there is no European Union standard for flood defence systems and that the OPW has developed the effective national standard. All OPW major schemes are now built to protect against the one-in-100 fluvial event and, where applicable, the one-in-200-years tidal flood event with additional allowances being made for climate change. The OPW has also advised that while it looks critically at every design solution to minimise the use of demountable systems, virtually every scheme in a town will have some type of access point for safety reasons, maintenance, recreation or amenity. This access will usually involve a gate. This is the situation with any flood defence scheme in any country. Demountable defences are now an internationally accepted and established measure for providing flood protection as part of publicly funded flood relief schemes.

This issue will have to be resolved because we are going to be spending hundreds of millions of euro on flood relief schemes over the next number of years which will include demountable defences. Demountable defences have proven to be successful in the towns across Ireland where they have been employed, yet they are not recognised by the insurance industry as being of the same standard as permanent defences. While there is merit in implementing flood defence schemes and protecting towns from flooding, the value of that is diminished if households and businesses in those towns are unable to access flood insurance. What we need from the Minister is a commitment that if the industry continues to dig its heels in on the issue, the Government is prepared to act. The Minister will find support across the House if he is prepared to take action to deal with this issue. As far as I can see, there is a stand off. I have seen what the insurance industry is saying about demountables, but the net effect is that homes and businesses will remain without flood cover even where we have spent huge sums of money to implement schemes which actually work.

I thank the Deputy for his promised support. In my view, the attitude of the insurance industry to the provision of insurance where demountable defences have been put in place is now bordering on the ridiculous and cannot be allowed to continue. Demountable defences are an internationally accepted and established measure for providing flood protection as part of publicly funded flood relief schemes. They form a critical part of the Bradley and Shrewsbury schemes on the River Severn in the UK and are used in the Netherlands, France, Germany and the USA. In Austria, demountable defences successfully provided protection to at least 14 cities and towns during the extreme floods along the Danube and Elbe rivers in 2013. Demountable schemes there were up to 3 km in length and up to 4.6 m in height. As such, I do not understand the position of insurance companies in Ireland when the international experience shows that demountable defences are very effective and meet the one-in-100 river protection criteria and one-in-200 tidal protection criteria.