Tuesday, 10 July 2012
Topical Issue Debate
Late on the night of Sunday, 5 November 2000 and early the next morning is a time that I will not forget for the rest of my life. I was with residents in estates in Lucan in my constituency and I remember the looks of horror on their faces as they tried to save their homes, many of which were flooded by several feet of water. Twelve years have passed, €5 million has been invested and no further floodings have affected the area despite similar devastation in other cities, towns and homes throughout the country. Despite this, many insurance companies still deny insurance cover to the residents of the estates in question. This is wrong, given the investment and everything that has occurred since 2000. Will the Minister of State ask the Irish Insurance Federation, IIF, to tell its members not to discriminate against these residents? They should not be denied flood cover in 2012.
I have raised this matter with the Minister of State, Deputy Brian Hayes, previously and he has engaged with the IIF, but not enough is being done. Last night, I met residents in the Artane area who were still suffering the consequences of floods in 2008 and 2009 and on 24 October 2011. If one cannot get house insurance, one's home is effectively worthless, as no incoming buyer can get a mortgage without house insurance.
This situation is out of the control of residents. Many of the areas were not affected in the 2002 Dublin floods and whatever has since occurred is probably a question for the local authority, but the residents are unable to get flood insurance for their homes. Will the Minister of State ask the IIF to engage more readily with local authorities in finding solutions to the flooding problems that clearly still exist? This is not just a local constituency issue, given the fact that the situation in Cork is on many people's minds as well. The problem affects other constituencies. The city council does not seem to be undertaking a process to reach a solution in respect of the River Naniken in Artane. Will the Minister of State update us on the councils' negotiations with the IIF? Residents need house insurance if their homes are not to be made worthless by a situation that is beyond their control.
I thank the Deputies for raising an important issue. I apologise on behalf of the Minister for Finance, Deputy Noonan, who is unable to attend. At the outset, I express my sympathy to anybody whose home or business was flooded in recent weeks. It is a difficult time for such people and the House will be aware that the Department of Social Protection is providing individuals with emergency payments to offset immediate needs, for example, assistance with the purchase of food, clothing, fuel and household goods. A number of community welfare service clinics operating in the Cork area have extended their opening hours, providing an additional emergency service. This has been supplemented by facilitating clients by appointments and making house calls to those in affected areas.
Regarding the substantive issue of the provision of new flood cover or the renewal of existing flood cover, it should be noted that this is a commercial matter for insurance companies and must be based on a proper assessment of the risks that they are accepting. These are often considered on a case-by-case basis and it is important to be clear that neither the Government nor the Central Bank has any influence in this regard. The Central Bank's consumer protection code contains no provisions that compel an insurance company to accept a particular insurance risk.
The IIF has advised me that flood insurance cover is available to approximately 98% of householders. The IIF has indicated that, when making an underwriting decision, an insurer reviews a property's claims history and any flood protection measure implemented by the Office of Public Works 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 policies. According to the IIF, insurers try to provide flood cover wherever possible. However, it makes the point that flood insurance is sometimes not economically viable and, in the interests of keeping premiums affordable for policyholders in general, insurers decline flood cover for new business for some risks or in certain cases need to withdraw flood cover at renewal.
Due to the difficulties currently being experienced by householders in certain areas in accessing flood insurance, the Minister of State, Deputy Brian Hayes, and his officials in the OPW have had a number of meetings with the IIF. These discussions have allowed a sharing of information and better understanding about the scope and scale of the work undertaken by the OPW on its flood risk management programme and, in particular, on the mapping of areas subject to flood risk nationally, which will emerge from the OPW's catchment flood risk assessment and management, CFRAM, programme. This work is being undertaken on the OPW's behalf by specialist consultants and is organised into six regional or catchment areas. These comprehensive studies will recommend an integrated management plan and prioritised measures to address flood problems in areas where there is significant risk. As the Deputies will be aware, a programme of flood relief work is also ongoing around the country.
Part of the discussions have focused on how the insurance industry could best address the issue of the provision of flood insurance where incidences of difficulties in obtaining flood insurance are being raised. The industry maintains that the incidence rate represents a small element of its business and that, where difficulties arise, the causes are complex, with each case being assessed in light of the particular circumstances applying. The OPW and the IIF are keen to establish an ongoing means of sharing information on areas vulnerable to flooding, on identifying flood defence works carried out or funded by the OPW and on the impact of those works in reducing the risk of flooding in areas where flooding previously occurred.
Work is continuing on this matter and a number of issues remain to be clarified with a view to agreeing with the Irish Insurance Federation a viable basis on which information can be provided. There are complex technical issues involved concerning the design standards and risk levels of defence works and maintenance arrangements.
I thank the Minister of State for the quite comprehensive reply, although he will not be too surprised to hear that I am not happy with the Irish Insurance Federation's indication that when making underwriting decisions, it considers the claims history of property and flood protection measures implemented by the Office of Public Works and the local authorities. In my own constituency, approximately €5 million was invested and the success of those works has been shown over the past 12 years when many other cities, towns, villages and homes throughout the country have been devastated. Nevertheless, there are people in estates whose homes were flooded once 12 years ago - the homes were built on flood plains - but investment was made and the works have been successful, and these people are still being denied flood cover.
Will the Minister of State relay my concerns to the Minister of State at the Department of Finance, Deputy Brian Hayes? Will he pay me the courtesy of a visit so I can show him the works that have been done? I still need to revert to the IIF and demonstrate my unhappiness with that element of the reply.
The indication is that the IIF, while making underwriting decisions on insurance, considers the claims history of the property and any flood protection measures implemented by the Office of Public Works, OPW, and local authorities. Clanmoyle Road in Donnycarney is an example in my constituency and I am quite sure it is replicated nationwide. Extensive works have been done by the city council but the position has not changed for those householders. The council has indicated to me that a hydraulic analysis of the River Naniken is required but there is no funding to do it. What happens then? Works are required but there are no funds, although applications have been made to the OPW with little success. What is the householder to do when there is a need identified by the city council but works have not been carried out and people are left with no home insurance?
I ask the Minister of State to engage again with the insurance federation, the local authorities and the Office of Public Works to ensure that any identified needs necessary to expedite this problem can be carried out. When a process is place, the works can be presented to the Irish Insurance Federation. This cannot carry on and residents in my constituency and throughout the country should not be looking at dark clouds and wondering if the problem will happen again. That is the exactly what is happening in my constituency and I am sure it is the same in other Deputies' areas.
The OPW has informed me that the flood alleviation works on the River Griffeen in Lucan were carried out by South Dublin County Council and completed in 2006. The initial phase of the works was funded by the council and the final phase was funded by the Department of the Environment, Community and Local Government. The council has indicated that the works were completed satisfactorily and it is unaware of any continuing flooding issue in Lucan since the works were completed. I am happy to relay the Deputy's request to meet the Minister of State at the Department of Finance, Deputy Brian Hayes, and I am certain he will visit the site and speak directly to Deputy Keating. I have asked the OPW to follow up with South Dublin County Council and the insurance industry as part of ongoing discussions. A meeting with representatives of the IIF involving everybody might be a good way to follow up.
The previous Administration examined the introduction of a scheme to protect householders who cannot obtain household insurance from regular insurance bodies due to flooding risk. This approach was not considered financially viable as it was believed that over time it would incentivise the industry to discontinue the provision of cover in medium and high risk areas, thus making the cost of such a scheme prohibitive. In the current economic circumstances there are no proposals for a State indemnification scheme.
The OPW allocation for flood risk management for 2012 is €45 million, with a further €17 million provided for maintenance of completed arterial drainage schemes. The EU floods directive requires that the catchment flood risk assessment and management study, CFRAMS, be completed by the end of December 2015. I will bring the concerns of both Deputies to the attention of the Minister of State, Deputy Hayes, and I ask them to sit down with representatives of the OPW and arrange for the Minister of State to visit the affected sites.