I am conscious of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and businesses, and that is one of the reasons the Government has been prioritising investment in flood defences over the last number of years.
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. As Minister for Finance I have responsibility for the development of the legal framework governing financial regulation, and 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. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.
Insurance Ireland has informed me that its members, since 1 June 2014, have factored data on all completed flood defence schemes, provided by the OPW, into their overall assessment of flood risk. This information has been provided as part of the information sharing arrangement entered into between OPW and Insurance Ireland (Memorandum of Understanding). The nature of this arrangement is such that it has led to a greater availability of flood cover in previously higher risk areas. For instance, the most recent Insurance Ireland survey of approximately 85% of the property insurance market in Ireland indicates that of the completed defence schemes, 90% of policies in areas benefiting from permanent flood defences include flood cover, while there has been an increase from 66% to 77% of policies in areas benefiting from demountable defences including flood cover.
In addition, the Deputy should note that the Insurance Ireland/OPW working group, which the Department of Finance attends, now meets on a quarterly basis to support the above information flow and to improve the understanding of issues between both parties. The working group allows for the sharing of relevant data on completed flood defence schemes. In this regard, the OPW has also provided a significant amount of detailed data in relation to adequacy and resourcing of flood warning systems, and mobilisation, efficacy, maintenance and development of demountable defences to Insurance Ireland. A sub-group has also been set up to explore the technical and administrative arrangements that may allow for the further sharing of data.
One of the outcomes of these discussions is that the insurance industry has now acknowledged that they accept that the demountable defences meet the desired 1:100 year standard. However it still maintains the view that while demountable defences are effective where correctly deployed, there are significant interdependencies, including human intervention, which increases the risk of failure. This is subject to ongoing discussions.
Finally, it is important to note that a consumer can make a complaint to the Financial Services Ombudsman in relation to any dealings with a Financial Services or Insurance provider during which they feel they have been unfairly treated. In addition, individuals who are experiencing difficulty in obtaining flood insurance or believe that they are being treated unfairly may contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance.
