Michael McGrath (Cork South Central, Fianna Fail)
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42. To ask the Minister for Finance in view of his comments the insurance industry must cope with flood insurance, his views on whether the industry is sufficiently prepared to cope with challenges associated with flooding and subsidence issues; and if he will make a statement on the matter. [8382/14]

Michael Noonan (Limerick City, Fine Gael)
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The provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting and the making of adequate provisioning to meet these risks. Flood cover claims are generally significant and in order to provide such cover, insurance companies would say that they have to be satisfied that the potential for such floods arising is low. It is a matter for the industry to set its premiums and make provisions at the appropriate level to ensure that it can cope with flood and subsidence issues. Furthemore, as a matter of course, insurance companies carry out reviews of the risks they are prepared to insure against and sometimes make decisions to discontinue certain types of cover which they consider high risk, such as homes in an area which is prone to subsidence.

Government policy in relation to flooding aims to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences based on a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme.

This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016. Works are completed on a prioritised basis. Once these works are completed the availability of flood insurance in affected areas would be expected to increase.

My colleague, Minister of State Hayes at the Office of Public Works has taken the lead role in discussions with the insurance industry about improving the provision of insurance cover in areas where remedial works are being carried out and OPW is near agreement on a data-sharing platform which will facilitate the transfer of detailed information on completed OPW flood relief schemes on an on-going basis. This will allow the insurance industry to take into account the flood protection measures when assessing flood risk in localities where such flood measures have been completed.

While the agreement on the memorandum of understanding with the insurance industry is to be welcomed as a first step, ultimately, it will be a matter for the insurance companies themselves to decide how they will use the information provided on completed flood defence works but they are committing to take the information into account in their assessment of risk and it is to be expected that this will facilitate the provision of flood cover in areas that are protected by completed schemes.

Kevin Humphreys (Dublin South East, Labour)
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43. To ask the Minister for Finance if he will consider the State becoming the insurer of last resort for homeowners who cannot get flood insurance for their properties due to market failures; if he will consider whether such an insurance scheme could be achieved with a levy similar to the Flood Re scheme in the UK, or the scheme proposed by the National Flood Forum whereby a combination of State support and a recurring contribution from owners of uninsurable homes could form a fund to provide a capped contribution to homes that are flooded again; and if he will make a statement on the matter. [8246/14]

Michael Noonan (Limerick City, Fine Gael)
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The issue of flood cover and its unavailability in some instances is one with which I am familiar. I am also very conscious of the difficulties that the absence of such cover can cause to householders and businesses. While the lack of availability of flood insurance affects a relatively small number of people, the consequences for these people are serious should their house or commercial premises be damaged by flooding.  However, neither I, as Minister, nor the Central Bank, have the power to direct insurance companies to provide flood cover to specific individuals.  The issue of provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting.

Government policy in relation to flooding aims to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences based on a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme.

This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016. Works are completed on a prioritised basis. Once these works are completed the availability of flood insurance in affected areas would be expected to increase.

The Minister for State at OPW has taken the lead role in discussions with the insurance industry about improving the provision of insurance cover in areas where remedial works are being carried out and OPW is near agreement on a data-sharing platform which will facilitate the transfer of detailed information on completed OPW flood relief schemes on an on-going basis. This will allow the insurance industry to take into account the flood protection measures when assessing flood risk in localities where such flood measures have been completed.

The Government has previously examined the introduction of a scheme of State indemnification to protect householders who cannot obtain household insurance in respect of flooding from regular insurance bodies. However, at the time this approach was not considered financially viable because it is believed that over time it would distort the market and incentivise industry to discontinue the provision of cover in medium and high risk areas, thus making the cost of such a scheme prohibitive. Furthermore, consultations with the Central Bank have led to concerns that if a levy or charge was applied to households then such a scheme would be considered a State insurance company which would raise a range of regulatory and capital issues.

The Deputy will be aware that as part of the response to the recent flooding events, the Department of Finance is currently undertaking a review of the availability of flood insurance cover. When the review is complete, I will examine it and will report to Cabinet on what measures, if any, are needed to improve the availability of flood insurance cover.

The Deputy refers to the scheme proposed by the National Flood Forum.  I am aware that the Flood Forum gave a presentation to the Joint Committee on Environment, Culture and the Gaeltacht on the issue of property insurance in March 2013.  These proposals will be considered as part of the flooding insurance review.

The Deputy also refers to a reinsurance scheme whereby insurance companies could pool their flood insurance liabilities, similar to the temporary scheme in the UK known as Flood Re.  However, the introduction of such a scheme would likely lead to a significant increase in household insurance premiums as those in low risk areas would be required to subsidise those in high risk areas.  Furthermore, the Exchequer would also be required to provide financial assistance to such a scheme in circumstances where the claims were above the level of funds in the pool.  I am continuing to monitor how the difficulties around the Flood Re scheme are being addressed in the UK.

In cases where individuals who are experiencing difficulty in obtaining flood insurance believe that they are being treated unfairly, they can contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at (01) 676 1914 or by email at .