I move:
That leave be granted to introduce a Bill entitled an Act to provide for fairness in the market for property insurance, and to provide for related matters.
The Bill is designed to deal with a situation which the Taoiseach discussed as recently as yesterday with the insurance industry. It relates to circumstances whereby the OPW has completed flood relief schemes to the required European standard under the 2007 directive. The OPW is the national competent authority for the delivery of such flood relief schemes. In my view, it is not acceptable that once the schemes have been completed the insurance industry can continue to refuse to reinstate flood cover for homeowners and businesses in the affected areas.
I welcome the meeting held yesterday, but the proof will be in the pudding. The insurance industry has a week or so to come back to the Taoiseach, and I hope there will be decisive action to deal with this issue. The absence of flood insurance is not only a matter of grave concern for homeowners and their peace of mind, but also a very important issue for the lifeblood of the local economy and the communities affected. Businesses that cannot access flood insurance, even if there is now little or no risk of flood events given the successful implementation of those schemes, will be denied credit from financial institutions and may not be able to expand. The very livelihood of the people involved in the businesses is under real threat.
The insurance industry has said it provides cover in 86% of cases where there are fixed defences and 67% of cases where defences are removable or demountable. The fact of the matter is that even if these figures are accurate, the 67% of homeowners and businesses that had insurance in place prior to the flood relief works are the same 67% that have cover afterwards. In other words, the insurance industry is not taking into account the fact the OPW has completed such flood relief schemes. This is not an acceptable situation. As the next Government, whoever is elected to office, intends to roll out a major flood relief programme over the coming years, these communities deserve to know that once the schemes have been completed, flood cover will be put place.
I do not accept the distinction drawn by the insurance industry between demountable defences and permanent flood defences. Permanent flood defences are simply impractical in many communities affected. As we all know, demountable flood defences are used successfully throughout the world and have been used and tested in local communities in Ireland over recent weeks. The Bill would require the industry not to discriminate against those who live in areas which OPW flood hazard maps designate as having a one-in-100-year risk or better, or which the OPW otherwise certifies as having a one-in-100-year risk or better. An insurer would still be entitled to charge a premium that could be reasonably justified by the current risk profile associated with the property. Under the legislation, property owners would be entitled to complain to the financial services ombudsman if they were unreasonably refused insurance or were offered it at an unreasonable premium when the current risk profile of the property was taken into account. The same process could also be used by property owners where an insurance policy was offered subject to unreasonable terms and conditions.
The Bill also sets out the role of the Central Bank in the application of the legislation. It would be empowered to carry out an assessment of the manner in which an individual insurer, which is a regulated entity, deals with applications for insurance by people who live in relevant areas. The bank would also have extensive powers to direct an insurer to change its practices or take any other steps necessary to ensure compliance with the legislation. If necessary, the Central Bank could seek an enforcement order in the High Court and an insurer could be subject to significant fines.
The situation facing communities that remain prone to flooding in future is more difficult, and this is why a much more extensive body of work is to be done, for example, to examine the Flood Re scheme in the UK. I am opposed to the introduction of any new levies, because levies introduced, perhaps with good intentions, on a temporary basis become permanent. All policyholders have to do is look at the 3% levy introduced many moons ago with regard to the rescue of PMPA, which ultimately became a permanent stamp duty on the books. People will not tolerate this.
