Written answers

Tuesday, 25 February 2014

Department of Finance

Flood Risk Insurance Cover

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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173. To ask the Minister for Finance his plans to develop a State-funded financial aid package for householders unable to get insurance cover for flood damage, because of where they live. [9172/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The possibility of developing a scheme whereby the state would pay compensation to those who have been flooded has been examined. However, the difficulty of forecasting severe weather events means that it is difficult to quantify the cost of a state-funded financial aid package in any particular year. These costs would be in addition to the normal infrastructure costs which arise from flooding such as repair of roads, bridges etc. Furthermore, there exists a very real possibility that industry would have a strong incentive to discontinue the providing flood cover to policyholders in medium and high risk areas thus increasing the potential cost of the scheme over time. So it has the potential to undermine the nature of the existing private insurance regime, making it difficult to withdraw an indemnity, even if introduced on a short-term basis.

Humanitarian assistance is being provided in areas affected by flooding under a new Department of Social Protection Humanitarian Assistance Scheme which has been allocated of up to €25 million. It provides means-tested financial support to people who have suffered damage to their homes as a result of the flooding. 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.

In addition, the OPW and the Insurance Ireland have been engaged in discussions to agree on a sustainable system of information sharing in relation to completed flood alleviation schemes and works undertaken by the OPW or, in certain instances, by local authorities with OPW funding, and where the standard of protection afforded by these works could be verified. There is agreement in principle but with some operational details to be finally sorted by the insurance companies. The outcome of these discussions means that the insurance industry will have a much greater understanding of the extent of the protection provided by flood defence works and will therefore be in a position to provide the necessary flood cover to householders in areas where works have been completed.

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 .

Photo of Nicky McFaddenNicky McFadden (Longford-Westmeath, Fine Gael)
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174. To ask the Minister for Finance if his attention has been drawn to the evidence recently given by the British Insurance Brokers' Association to the British Government's Environment, Food and Rural Affairs Select Committee (details supplied); if he will investigate the four options suggested by BIBA in relation to future policy on flood provision and examine the way options might be adopted here; and if he will make a statement on the matter. [9173/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As part of the response to recent flooding events the Department of Finance is currently undertaking a review of measures to address the availability of flood insurance cover. In broad terms, the review will look at the most cost effective means to address flood insurance problems and will look at the experience and proposals in other countries, including those brought to my attention by the Deputy. In assessing these, care has to be taken that the proposed solutions do not put in place arrangements which, over time, would weaken the provision of insurance cover by the market with possible negative long-term consequences for the economy.

When my Officials have completed the review, I will examine it and report to Cabinet on what measures, if any, are needed to improve the availability of flood insurance cover. 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.

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