Alex White (Dublin South, Labour) | Oireachtas source

I thank the Deputy for raising this important issue. It should be noted that flood cover and its unavailability has been raised in this House on a number of occasions, not least by Deputy Daly and others. It is a subject with which I am most familiar. I am also conscious of the difficulties that the absence of such cover can cause to householders and businesses. The Deputy outlined them in his contribution.

The Deputy will be aware that the substantive issue of the provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which must be based on a proper assessment of the risks the insurers are accepting. These are often considered on a case by case basis and neither the Government nor the Central Bank has any influence over this matter. The Irish Insurance Federation, IIF, has advised the Minister that flood insurance cover is available to approximately 98% of householders in Ireland. It has indicated that when making underwriting decisions, insurers look at the claims history of the property and any flood protection measures implemented by the Office of Public Works, OPW, or local authority. As a result, some people will pay a higher premium because the flood risk is higher, or will have a higher flood excess on their policy. While insurers try to provide flood cover wherever possible, flood insurance is sometimes not economically viable, and in the interests of keeping premiums affordable for policyholders in general, the IIF says that insurers decline flood cover for new business for some risks or in certain cases have to withdraw flood cover at renewal.

The Office of Public Works is committed to doing all it can to alleviate the impact of flooding through the provision of defences and by taking steps to manage and reduce flood risk in the future through a strategic and sustainable approach under the national catchment flood risk assessment and management, CFRAM, programme. This commitment is underpinned by a very significant capital works investment programme which, along with expenditure on maintenance of arterial drainage schemes, will see up to €250 million being spent on flood relief measures over the next five years. The Deputy, in fairness, has also referred to the fact that various measures are being taken under the direction of the Minister of State, Deputy Brian Hayes, and his officials in the OPW, and there have been a number of meetings with the IIF about this matter and the various initiatives that are being taken.

The issue of a State indemnification scheme for those unable to obtain flood cover has been raised on a number of occasions. While it is difficult to quantify what the costs would be in a particular year, it is possible to say that the costs would be significant over a period of time on the basis of the eight major floods over the 12 year period, 2000 to 2012, costing the insurance industry approximately €700 million in flood claims. These costs are in addition to the normal infrastructure costs which arise from flooding such as repair of roads, bridges and so forth. Furthermore, if a scheme of this type was established, there is a danger that the industry would have a strong incentive to discontinue the provision of flood cover in medium and high risk areas, thus increasing the potential cost of the scheme over time. Therefore, such an arrangement has the potential to undermine the nature of the existing private insurance regime, making it difficult to withdraw it, even if was introduced on a short-term basis.

The approach being adopted by the Government to ensure the availability of flood insurance consists of continuing to prioritise spending on flood relief measures by the OPW and relevant local authorities, improving channels of communication between the OPW and the insurance industry on the effectiveness of these measures, and implementation of a comprehensive and strategic approach to flood risk management through the national CFRAM programme.

With regard to Deputy Daly's suggestion of the introduction of a regime similar to the Motor Insurers Bureau of Ireland, MIBI, system in respect of motor insurance, the problem with that proposal centres on who would fund such a scheme. Unlike motor insurance, flood cover is not a compulsory insurance system in this State, so there would be no basis for compelling the industry to contribute to an equivalent scheme for flood cover, as is done in respect of motor insurance. In these circumstances, the State would have to fund such an arrangement and it would, in effect, create a State indemnification scheme with major costs for the Exchequer.

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