Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Many communities in Ireland know all too well the utter devastation that can be caused by flooding. Tackling this issue necessitates a multi-pronged response including proper planning, ongoing maintenance of our rivers and the completion of flood relief schemes to name but a few. The focus of this Bill is on the issue of flood insurance. The Bill is built on the premise that households and businesses should be able to avail of flood insurance cover once an OPW flood relief scheme has been completed to the required standard. That is what lies at the heart of this Bill. A different solution is needed for people who live in areas where the risk of flooding remains high. This Bill would give them hope too that flood cover would follow an OPW scheme in their area.

This Bill has been made necessary by the experience in communities where flood schemes have been completed. The experience has been that flood insurance is not readily available and where it is available, it often comes at an unaffordable price or with terms and conditions, such as a policy excess, that make it utterly unviable. Over the next five years, we are told the OPW will invest €430 million on flood relief schemes. This investment is badly needed and is to be welcomed. The least we can expect for that public investment is a quid pro quofrom the insurance industry. State investment in flood defences should lead to a favourable response from the insurance industry through the provision of flood cover on reasonable terms. The roll out of flood relief schemes is far too slow but to give credit where it is due to the OPW, when schemes are completed, they have proven to be successful. Why then should we tolerate a situation where insurers, in many instances, refuse to provide cover or where they do, they do so at a prohibitive cost? This Bill requires insurance cover to be provided in circumstances where the OPW has completed flood relief schemes to the required European standard under the 2007 directive. It is not unacceptable that insurance companies continue to deprive households and businesses flood insurance cover when a flood relief scheme has been put in place. The Bill will make it unlawful for an insurance company to discriminate against people and businesses in areas which now have a low probability of flooding. Low probability defined under this Bill is an area certified by the OPW as having a one in 100 year flood risk or better. Where there is a concern that an insurer is acting contrary to the requirements of the Bill, property owners will be able to lodge a complaint with the Financial Services Ombudsman. On completing a review of a complaint, the Financial Services Ombudsman will have the power, if appropriate, to direct an insurer to offer insurance at a price and on such terms as it considers fair, reasonable and appropriate.

This Bill clearly outlines the role of the Central Bank in the application of the legislation. The Central Bank shall have the power to carry out an assessment on how an individual insurer deals with insurance applications from individuals in the relevant areas. It will also be empowered to direct an insurer to change its practices or take steps necessary to ensure compliance with the legislation. If necessary, the Central Bank could seek an enforcement order in the High Court and an insurer could be subject to significant fines. One of the key findings of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach's report on motor insurance relates to the lack of data. The Minister of State, Deputy Eoghan Murphy, knows this well. The same is true of flood insurance. The bottom line is the Government is relying on insurance industry data which has not been validated. This is no basis on which to frame public policy.

The insurance industry tells us that 98% of property insurance policies nationally have flood cover but a CSO household survey from 2010 indicates that a third of all households may have no household insurance at all. The industry tells us that in areas where flood relief schemes have been completed and information has been exchanged with the OPW, 83% of property insurance policies in these areas include cover against flood risk. Where the flood scheme involves demountable defences, this falls to 78%. This data has not been independently validated and there is a distinct lack of baseline data from before the flood relief scheme was put in place so it is not possible at this point to assess the true impact of the flood scheme on insurance availability. We currently have a ridiculous stand-off between the Government and the industry on demountable defences. The industry does not favour demountable defences and is less inclined to provide insurance cover where a flood relief scheme includes demountables. This issue simply has to be dealt with. Demountable defences have been successfully used in a number of flood relief schemes in Ireland and they are used commonly throughout Europe. Many of the major flood relief schemes we are about to embark on across the country involve demountable defences. If this is not acceptable to the industry, where does that leave households and businesses hoping to access insurance when the scheme is completed? I do not accept the distinction drawn by the insurance industry between demountable defences and permanent defences. Permanent defences are impractical in many communities and the effectiveness of demountable defences has been proven not only in Ireland but around the world. My city of Cork is a prime example of why this issue needs to be dealt with. Next year, work is finally due to commence on a major flood relief scheme with an estimated cost of between €60 million and €80 million. When the OPW put plans on display in July 2014, Insurance Ireland promptly issued a statement denouncing the use of demountables in the plan and saying, "Permanent, fixed flood defences built to a standard of 1:100 years as at 1 January 2012 are the minimum that should be implemented if insurance is to be a viable proposition in the areas to be defended." In other words, according to the insurance industry, the scheme that the State is about to pay up to €80 million for in Cork city is not a viable proposition for insurance to be provided. This issue remains unresolved today.

From what I gather, the Government is not going to accept this Bill. I would rather this Bill were not necessary but rejecting it would be a mistake. The Government should embrace this Bill and, at a minimum, use it as leverage in its negotiations with the insurance industry. The Bill is not perfect and can be improved during the legislative process. It should be allowed to proceed to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach where detailed pre-legislative scrutiny can be done to examine these issues in more detail. I have read the interim report of the interdepartmental flood policy co-ordination group and the Department of Finance report on insurance and flooding. More importantly, we have listened to people in communities who are living with the daily reality of having no flood insurance. If the current strategy was working, we would not have a packed Gallery tonight. I acknowledge the work of the Irish National Flood Forum and all those who travelled here to listen to this debate and to show their support for the Bill.

The lack of flood insurance is also stifling for many communities and villages. Banks will not provide a small business with a loan unless it has flood insurance. This means that many small businesses are being constrained from investing and growing. They also risk closing altogether if they are affected by flooding. Households can only sell their houses to cash buyers in many cases because of the lack of flood insurance. This is particularly unfair given that these businesses and households still have to pay rates and property tax in full. In short, flood insurance is being denied to people despite the progress made by the OPW. This Bill seeks to address this failure. I urge Deputies on all sides of the House to support the Bill and I look forward to the full debate over the next couple of hours.

See this speech in context