Mr. Kevin Thompson:

Flood coverage is actually increasing. We have given our statistics which illustrate that to the Office of Public Works. For fixed defences, we are up to a coverage rate of 89% and the rate for the demountables is 75%, which gives us an average of 83%. From our perspective, the memorandum of understanding is working. Coverage rates are increasing and we would envisage that they would continue to increase over time. Nevertheless, we recognise that it takes time for coverage rates to increase and get to a level that the public demands. Equally, insurers must act in an prudent manner. They must be cognisant of their solvency and the risk they take on. To increase the coverage rates, it would help if the industry to return to a more profitable state. Once that happens, capacity will increase and new capital will come into the market with new providers, which will increase coverage.

There are also situations in particular areas where certain insurers will have reached their concentration limits in the context of their own risk appetite. In the management of their own capital, the committee will appreciate, certain insurers in a given area will decide that they have taken on as much risk as they can there. That is why it is important to encourage new entrants into the market, in order to provide additional capacity so that over time we can increase the coverage rates. We firmly believe that the Office of Public Works is working as is the memorandum of understanding between ourselves and the Office of Public Works. That is borne out by the coverage rates.

I also recognised some of the comments of earlier participants. There were two observations. One related to the industry's breach of consumer protection codes on loss assessors. We tell people that where there is evidence of breaches in specific cases, this should be brought to the Central Bank.

We would encourage participants to do that.

On the issue of retention limits, it is important for the committee to understand why they exist. Insurers make an advance payment to an affected claimant to allow him or her to conduct remedial work at no financial loss to himself or herself. They withhold a percentage of the claim amount until such time as they have confirmed that the works completed by the third party are to the required standard, following which they release the moneys. The consumer is in no way disadvantaged, from a financial point of view in particular, by retention limits.