Dr. Swenja Surminski:

I thank the committee for the invitation. In 2015, I gave evidence here which triggered my interest and led to a project that I did with the Environmental Protection Agency. I am quite grateful to be here and hope that my work will contribute to this debate. Part of my work involves working with University College Cork.

Before delving into the technical details it is important that we recognise that flooding is a real concern and threat. Yesterday and last night flooding occurred and it is ongoing. Often when one conducts research one views it through a very technical lens. It is really important that we understand the concerns of the businesses and home owners who struggle to get insurance cover.

My remarks will be structured around three points, which are mainly based on my policy paper that I am sure the committee has seen before. I will commence with my understanding of the underlying problem, which is why we are having this welcome and much needed debate. As I always say, there is a cause and a symptom. While there is certainly a need to provide some interim solutions that will help people who are struggling to get flood insurance, it is important to understand the threat of flood risk and the related decisions in terms of planning policy and investments made to defend areas. I know from my work here that a lot of progress has been made. I wish to underline the fact that the OPW has made significant progress and the amount of data available has increased significantly. Also, a lot of effort has been made around climate adaptation. Clearly, however, this does not resolve the issue for the people who are currently struggling and that is the problem the Bill tries to address. Overall, it is important to recognise that the flood insurance market works for the large majority of people in this country. That is not an understatement because, compared with a lot of other countries where there is no flood insurance market or where all of the flood insurance is provided through the government, that is certainly an achievement. That does not resolve the problem for the people who are currently struggling but it is important to keep that in mind when considering ways to address their current problems.

I will outline my observations so far. In terms of addressing the problem of businesses and home owners struggling to access flood insurance, it looks to me a little like a blame game between the industry on one side and either those affected but also, to some extent, the Government on the other side. My intervention here is to identify ways to resolve the blame game.

I value the debate that the Bill has triggered and to some extent, the debate is overdue. The legislation, however, raises two questions. First, is intervention through a Bill necessary? Clearly, there is need for action, more investment, better transparency, data sharing and a stronger commitment by the industry and support for those who struggle to access insurance. It is clearly an issue that needs to be addressed. The second question, however, is whether the Bill addresses this matter. I believe the Bill as currently drafted does not address the problems. I will highlight a couple of points. While members have more experience than do I when it comes to drafting Bills, on looking at the text, the current wording raises a few questions. For example, I refer to the aspect of what is reasonable in trying to understand how insurers can reasonably discriminate. The legislation generates many questions such as who would make that judgment and decision, who would agree on flat-risk profiling and who would become the arbitrary body.

The Bill only considers one problem, that is, where insurers are apparently or supposedly not taking into account the existence of new or existing defences. That is a frustrating issue and it is clearly not right. I do not think one needs a Bill to resolve the matter and will outline a couple of ways in which this matter could be resolved. It is key to understand where the underlying information issue sits because there is the big issue with how current is the information and how current are the maps that are being developed.

How good is the information held by the insurance companies themselves and how transparent is it? Outlining those questions, it will be clear that many have no clear answer. That is the key issue here. We do not have a transparent approach to rating flat risk, and there is no transparent approach to showing how that flat risk is evaluated by insurers and how it is communicated to home owners.

Before I give a few suggestions on how this might be addressed, I will conclude my remarks on the Bill. I feel that in its current version, the Bill might have an impact on the market which should not be underestimated. Among the possible responses are lower coverage levels, so insurers might just review their existing provision of cover to properties, and there could be some concern on solvency. We should recognise that if flat insurance is provided through the private market, then there must be some space for insurers to do their assessment and pricing. From discussions, I realise that is recognised by the Bill's supporters but the mechanism as currently provided for in the Bill would not work. The alternative would be to have a national insurance system, as in the US, where this issue is resolved because there is agreement on flat maps and flat risk and rating. This can raise many other questions, however, and I do not know if flat insurance is the way to go.

Where do I see the potential to resolve these underlying issues? We often hear about the memorandum of understanding. It is a step in the right direction but I do not think that it works as well as it could or should. There must be a more transparent approach. My recommendation would be to take the memorandum of understanding as a starting point but to revisit it and devise a new version. We cannot hide from risk data and modelling. Next year, a new insurance flat risk model for Ireland will be put into the market and there will be much new information coming through that. It might raise some concerns with people worrying that it might lead to higher premiums and make the situation worse. That is not how a flat insurance market should work. We need to understand how insurers consider risk data and how it impacts on price and on underwriting decisions. That transparency is necessary. There must also be greater sharing and speedier sharing - there is a delay with data about new defences being made available and then put into a flat risk models used by insurers which is unhelpful - but the insurers must also be more proactive. I can say that because I used to work in the insurance industry before returning to academia.

I work with many insurance companies internationally which also underwrite here. There is an overarching commitment and recognition that insurers want to play a role as society's risk manager. Ireland has an opportunity to hold the industry to account on that because clearly there are issues where that does not work. The main issue where this could be adjusted easily is that of transparency. Will this resolve the problem for those currently struggling to secure insurance cover? It should, in the longer term, but now it does not. There should be a discussion around options around deductibles, ensuring that even in high risk areas people can still access insurance, perhaps not flood insurance but insurance as such, because if someone cannot get any insurance then there is really a problem. We also need to track the scale of the problem. How many people are currently affected? How many will benefit from new defences? There is not much understanding or clarity on this question because different figures are being produced and it is not enough on which to base a strong intervention.

I will finish by reiterating that issues need to be addressed but by resolving the distrust and the lack of transparency, we could get quite far. If that does not work, there is a strong case for the Bill but we are not there yet. I hope my remarks are taken as encouragement to go back to the drawing board with the memorandum of understanding and make it work to begin with.