Dáil Éireann Debate, Wednesday - 21 April 2021
506. Deputy Neale Richmond asked the Minister for Finance if he has considered introducing legislation to compel insurance companies to offer flood protection to all who wish to avail of it; and if he will make a statement on the matter. [19505/21]
View answerAt the outset, it is important to state that the provision of insurance is a commercial matter for insurance companies, which is based on an assessment of the risks they are willing to accept. Consequently, neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products. This position is reinforced by the EU framework for insurance (Solvency II Directive).
Legislating for compulsory flood insurance was an option considered by my Department in its review of policy in relation to flood insurance in 2016, which formed part of the ‘Interdepartmental Flood Policy Coordination Group Interim Report’. It was found that such an approach would have limited impact on the availability of flood cover as it would simply result in, amongst other things, insurers pricing prohibitively for high risk properties; an increase in the pricing of low to medium risk properties; and the risk that insurers decide to withdraw from the market altogether. My Department has outlined the different policy options and challenges associated with flood insurance in the Paper published in 2019 entitled ‘Public Consultation on Climate Change and Insurance in the context of the ‘Climate Action Plan 2019 to Tackle Climate Breakdown ’.
Having said that, I am conscious of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and businesses. The Government is investing almost €1 billion in flood relief measures over the lifetime of the National Development Plan 2018-2027 with an expectation that insurers will provide cover where this has occurred. This approach is complemented by a Memorandum of Understanding between the Office of Public Works (OPW) and industry representatives Insurance Ireland. This provides for the exchange of data in relation to completed flood defence schemes which should, in turn, provide a basis for the increased provision of flood insurance in these areas.
Finally, I acknowledge that while there has been an overall increase in the provision of flood insurance between 2015 and 2020, some householders are still experiencing difficulties. This is particularly the case for households in areas with demountable flood defences. My officials are engaging with both Insurance Ireland, the OPW and other stakeholders regarding flood defence schemes and how the levels of insurance cover might be improved in areas where flood defence works have been completed. This is a difficult issue, however the Deputy should be assured that Minister of State Fleming and I will also continue to engage on all aspects of insurance reform, including flood insurance issues, and that every effort is being made to encourage a responsive approach from the insurance industry.
