Marcella Corcoran Kennedy (Offaly, Fine Gael) | Oireachtas source

On behalf of the Government and the Ministers of State, Deputies Eoghan Murphy and Canney, I would like to acknowledge the presence of the people in the Gallery who have travelled from across the country to hear tonight's debate. As a public representative in the Shannon catchment area in Offaly and north Tipperary, I am only too well aware of the devastation flooding causes to individuals, families and communities. I acknowledge also the fantastic support the communities provide for each other at times like this when we see community resilience at its best. It works particularly well when supported by the local authorities, which are the lead agencies in all of these flood events.

As my colleagues, the Ministers of State, Deputies Eoghan Murphy and Canney, mentioned at the outset, this Government is very conscious of the problems experienced by certain households and businesses in securing flood insurance in areas most at risk of flooding. It is appreciated that Deputy Michael McGrath’s aim in drafting this Bill is an attempt to address the issue of improved insurance cover for potential flood events, something which is of concern to all of us. However, in our view the Bill as proposed will not achieve that goal.

A major concern we have with the Bill is that it could lead to a situation whereby insurers are forced to provide a significant level of cover at inappropriate pricing levels, following an arbitration by the Financial Services Ombudsman. In our view, this would almost certainly result in a significant increase in household insurance premiums across the board as low risk policies would be required to subsidise higher risk ones. Such an occurrence would run contrary to Government policy to try to bring down the cost of non-life insurance policies in general through the work of the cost of insurance working.

Another concern is that this proposed legislation could have an impact on the quality of home insurance cover that is available, as the Bill specifically links the provision of property insurance to flood cover - in other words, one cannot get one without the other. Consequently, insurers may choose to only offer minimum cover in an effort to control the risk, and introduce higher excesses that policyholders must first pay themselves before a pay-out would be made. We are also concerned that some companies could choose to withdraw from the household insurance sector of the Irish market altogether. In view of the very small size of the Irish market, this would have a knock-on effect on price.

With regard to legal issues, we have a number of concerns on which the Department of Finance is consulting the Office of the Attorney General. In particular, we believe the Bill may run contrary to the EU Solvency II Directive and that there may be a requirement to consult with the European Central Bank on the proposed additional functions for the Central Bank as well as potential constitutional issues with the absence of an appeal mechanism for the regulated financial service providers targeted in the legislation.

The plans coming from catchment flood risk assessment and management, CFRAM, highlight that almost 95% of properties at risk from flooding in high risk areas will benefit from flood defence schemes as a result of Government investment. The Government has provided a significant increase in the Office of Public Works, OPW, budget for flood relief over the coming years to accelerate the implementation of these works, with €430 million allocated for the period 2016-21. In this time, the OPW’s annual spend on capital flood relief works will more than double to €l00 million.

I want to acknowledge the genuine positive comments from previous speakers on Government investment so far in areas of very high risk. I acknowledge also the efforts of the Minister of State, Deputy Canney, and the former Minister of State, Deputy Harris, in ensuring that happened.

I must reiterate the position of my colleagues, the Ministers of State, Deputies Eoghan Murphy and Canney, and repeat that the Government view is that this Bill as it stands would make for bad legislation. The Government has serious concerns about the proposed Bill in terms of pricing, competition and impact on availability as well as legal concerns. However, that was discussed by Government earlier today and notwithstanding the serious and material concerns, the Government will not oppose the Bill going to pre-legislative scrutiny.

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