Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

The joint committee will discuss the difficulties in obtaining home insurance for properties in areas that have experienced extreme weather events. I welcome from the Irish Insurance Federation Mr. Michael Kemp, chief executive, and Mr. Michael Horan, non-life insurance manager. I thank the witnesses for their attendance and for the federation's prompt response to our invitation earlier this year.

I draw the attention of the witnesses to the formalities as they operate under Standing Orders of the House. I draw their attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I also wish to advise you that the opening statements you have submitted to the committee will be published on the committee's website after this meeting.

Before commencing the presentation, I wish to say a few words. Flooding is now a regular feature of Irish weather conditions and it costs a lot of money to repair the damage it causes. The floods of earlier this year cost €54 million in damage and sizeable costs were also incurred during the several major floods that have occurred since 2000. They cycle of floods will show that regardless of whether it is for households or for businesses, the immediate shock of having one's property or business flooded comes with its own difficulties. This is followed by the clear-up and the other processes, the final stage of which concerns the question of whether one can get insurance again into the future and the associated difficulties and concerns. This is one of the main points of focus of the joint committee's deliberations this afternoon. In so doing, I note we cannot facilitate a situation to develop in which large numbers of households nationwide are deemed to be uninsurable or outside the protection of the normal insurance schemes that are available. I am familiar with the argument that insurance companies insure against risks but not against certainties and I do not think we will reiterate that argument this afternoon.

It does seem insurance companies are geotyping parts of the country in a blanket approach. Accordingly, a house deemed to be in a flood-risk or subsidence-risk area will not get cover. For example, it is impossible to get flood insurance for a dwelling within 100 m of a river even if it is an apartment 100 ft. off the ground.

In the past everyone could get full comprehensive car insurance. It is now being reported anecdotally that most policies are being stripped back to third party and fire and theft in some areas of the country because of the zoning approach applied by the insurance companies. If this is the case, this is a major change in direction of insurance policy strategy. The recent European report which examined flood risks remarked favourably on the model of practice used by the industry until now, which was to cover a broad range of insurance for non-specifics.

Another issue I wish the federation to address this afternoon is that, because regions are geozoned as being at particular risk of either flooding or other events, even if remediation works are carried out to reduce that risk, it is impossible to have this zoning removed. Parts of the country deemed flood risks 15 years ago have had major relief works carried out to prevent further problems. However, they are still zoned as being a flood risk. Then there are floods caused by engineering problems rather than a natural disaster, which happened this year.

I note the federation stated in its written submission that no more than 2% of policies exclude flood cover. However, 2% represents a sizeable number of people who must live with this uncertainty. There is a question of fairness about this, as well as the broader systemic consequences such as difficulties in selling on the properties. Except in the case of a cash purchase, an engineer operating for a mortgage bank will not allow the sale of such a property to proceed. We could actually have whole hosts of properties that are unsellable because of an insurance classification that may not stand up to scrutiny.

The Government has spent large amounts of money rectifying the circumstances that allowed flooding to occur in the first place. Why can the insurance companies not provide cover for houses in the areas where these remedial works have been carried out and flood prevention measures have been implemented? Why are such measures not considered when determining house insurance premiums?

I invite the federation to make its opening statement.