The subject of insurance against the risk of flooding is among the cross-sectoral flood policy risk issues which will be addressed in the forthcoming report to Government from the Inter-Departmental Flood Policy Co-Ordination Group. The Group is reviewing whole-of-Government policies to support the OPW Flood Risk Management Plans, and is due to report to me with its recommendations shortly. As part of the Group’s work, the Department of Finance has been carrying out research in the area of flood insurance including an analysis of the different approaches to flood insurance taken in other countries.
I will bring the Group’s report to Government for its consideration as soon as possible.
The Office of Public Works (OPW) has no role or function in relation to the oversight or regulation of insurance matters. 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 March 2014, a Memorandum of Understanding was signed between Insurance Ireland (II), the representative body for the insurance industry in Ireland, and the Office of Public Works (OPW). This Memorandum sets out principles of how the two organisations will work together to ensure that appropriate and relevant information on completed OPW flood defence schemes is provided to insurers to facilitate, to the greatest extent possible, the availability to the public of insurance against the risk of flooding. II members have committed to take into account all information provided by OPW when assessing exposure to flood risk within these areas.
The Memorandum came into effect on 1 June, 2014 with an initial tranche of data provided by the OPW to II in respect of 12 completed flood defence schemes and showing the design, extent and nature of the protection offered by these works. A further tranche of data was provided to II in January 2015 covering a further 4 completed flood defence schemes. OPW will continue to provide data to II as flood defence schemes are completed.
The OPW has also shared its programme of capital works with II.
Insurance Ireland estimates that flood cover is included as standard in 98% of household insurance policies throughout the country. II has carried out a number of surveys among its members to ascertain the extent to which flood insurance cover is available in the areas for which OPW has provided data on completed flood defence schemes. The results of the most recent survey were provided in January of this year; they indicate that 83% of property insurance policies in these areas include cover against flood risk. Where the defences are permanent in nature the percentage is 89%; where demountable defences are used the percentage is 78%.
II has pointed out that the effective operation of demountable flood defences requires accurate forecasting systems and methods, flood alert systems and monitoring, efficient mobilisation of equipment, manpower and materials and the timely and correct operation of the demountable defences. It has identified a number of specific risks associated with the operation of demountable defences and has stated that, should a failure occur in the deployment of demountable flood defences, the financial impact for insurers would most likely be very significant. Because of this potential exposure, insurers have limited risk appetite for providing flood insurance in areas protected by demountable defences.
I met recently with Insurance Ireland to stress the need for flood victims to have the best possible chances to be able to obtain insurance cover at reasonable cost. I highlighted that OPW schemes using demountable defences are built to the required standard and to provide robust levels of flood protection to properties. I welcome a commitment given to me by II to assess the risk from the deployment protocols, warning systems and emergency response systems in place. II and OPW will begin work to share information on the performance and deployment procedures of these defences.
