Ulick Burke (Galway East, Fine Gael)
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Question 226: To ask the Minister for Finance if he will bring forward legislation to protect both householders and businesses who were previously insured and are now being refused insurance due to recent flooding; if householders and businesses currently insured but not impacted by recent flooding have to pay increased premiums or levy even though they were not affected by recent flooding and who have not made claims on their policies; if he will curb the policy of cherry picking by insurance companies; and if he will make a statement on the matter. [3491/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am aware that because of the recent flooding, there are people who may have difficulties renewing flood insurance cover. The principal reason for this is that the decision to provide any specific form of insurance cover and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved. This risk assessment process which insurance companies apply is essential if a company is to be able to provide its services over the longer term and continue to remain solvent. Unfortunately, this means on occasions they have difficulty approving certain types of business because the risk of claims based on previous experience is too high. Neither I nor the Financial Regulator has any influence over such decisions due to their commercial nature.

The question of introducing legislation to make the provision of flood insurance mandatory and to preclude companies from choosing what they can cover is not something I am contemplating at this point, as it would run the risk of undermining the existing insurance model and could force many companies out of the market. Even if companies remained within the market they would almost certainly price high risk business in such a prohibitively expensive fashion, that it would quickly undermine the purpose of the legislation and would result in a considerable increase in overall household and business insurance costs.

The question as to whether household and business insurance costs are likely to increase for those not affected by the flooding is a matter for the insurance industry to decide. However, in broad terms insurance prices generally increase when there is an increase in overall claims to enable companies maintain the appropriate level of financial reserves necessary to continue in business over the longer term. Without such reserves insurance companies would struggle to meet future claims resulting from another major weather event.

Finally, the Government is committed to looking at what can be done for those who are unable to obtain insurance cover as part of its broader review of the recent floods.