Dáil Éireann Debate, Tuesday - 21 February 2023
212. Deputy Ivana Bacik asked the Minister for Finance his plans to reform flood insurance here; if he will make a statement on insurance cover for persons living in areas with demountable flood defences; and his views on legislating for compulsory insurance cover for those living in areas which are prone to flooding. [8062/23]
Amharc ar fhreagraAs Minister for Finance, I have policy responsibility for the development of the legal framework governing financial services regulation, including for the insurance sector. Within this context, it should be noted that the provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies providing the service and is based on an assessment of the risks that such companies are willing to accept. Therefore, under the EU Solvency II Directive, neither I, as the Minister for Finance, nor the Central Bank of Ireland can compel insurers to provide such cover.
Government policy in relation to flooding focuses on the development of a sustainable, planned and risk-based approach to dealing with flooding problems. To achieve this there is a focus on -
- significant investment by the Government of €1.3 billion to manage Ireland’s flood risk over the lifetime of the National Development Plan to 2030, with flood relief measures implemented by the Office of Public Works (OPW) and relevant local authorities, and,
- maintaining channels of communication between the OPW and the insurance industry, in order to reach a better understanding about the provision of flood cover in affected areas.
Alternative flood insurance models have been considered by the Department of Finance its review of policy in relation to flood insurance in 2016, and the ‘Public Consultation on Climate Change and Insurance’ in 2019. It was found that alternative approaches, including legislating for compulsory cover would have limited impact on the availability of flood cover. Mandating the provision of flood cover would result in, amongst other things: an increase in premia for all property insurance policies; the risk that insurers decide to withdraw from the market and the potential contravention of EU rules.
In terms of the outcome of the current approach to flood insurance, it should be noted that both industry and Central Bank of Ireland surveys indicate there has been an overall increase in the provision of flood insurance over the last number of years. However, it is acknowledged that some households are still experiencing difficulties, particularly in areas with demountable flood defences which require varying degrees of human intervention in their installation.
In order to address the issue of flood coverage levels in areas with demountable defences, continued engagement with all relevant stakeholders is key. This is facilitated as part of the Memorandum of Understanding (MoU) between the OPW and Insurance Ireland. Under this arrangement, the OPW provide information on all completed flood defence schemes to Insurance Ireland, including on demountable ones. In turn, its members take into account all of this information when assessing exposure to flood risk within these areas. Officials from the Departments of Finance; Housing and Local Government, along with other stakeholders engage constructively with this process on how the levels of insurance cover might be improved in areas where flood defence works have been completed.
Finally, as has been the case, my Department will continue to monitor and assess any flood insurance matters, including through: its participation in the OPW and Insurance Ireland Working Group; actively encourage industry to have a more responsive approach to the matter; engage with the Central Bank of Ireland; and consider domestic and international policy developments to these issues as they arise.
I and Minister of State Carroll MacNeill, along with our officials, will continue to engage on all aspects of insurance reform, including flood cover issues. These matters are a priority for this Government and efforts continue to be made to encourage a responsive approach from the insurance industry.
