Noel McCarthy (Cork East, Fine Gael)
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442. To ask the Minister for Finance the measures his Department is considering to assist property owners whose premises may have previously been damaged by flooding and who now have difficulty in getting insured; the engagement his Department has had with insurance providers on the matter in the wake of severe weather events; if his Department has considered the establishment of re-insurance schemes for affected households similar to those in other jurisdictions, such as the flood relief scheme that exists in the UK; and if he will make a statement on the matter. [12569/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Firstly, I would like to acknowledge the impact of the damage caused by severe weather events on families, communities, and businesses.

As Minister for Finance, I have policy responsibility for the development of the legal framework governing financial services regulation, including for the insurance sector. In terms of the challenges associated with obtaining flood cover, the provision of such cover is a commercial matter for insurance companies, based on an actuarial assessment of the risks they are willing to accept. Government cannot interfere in the provision or pricing of insurance, or direct insurers as to what cover is provided, as is reinforced by the EU framework for insurance (Solvency II Directive).

The Government remains committed to protecting Ireland’s present and future generations by investing in climate adaptation measures to manage the impacts of extreme weather. Accordingly, €1.3 billion has been committed to the delivery of flood relief schemes over the lifetime of the National Development Plan (NDP) to 2030. This will protect approximately 23,000 properties across various communities from river and coastal flood risk. Nationally, 55 schemes have been completed, at a cost of €550m, which are providing protection to over 13,000 properties and an economic benefit to the State in damage and losses avoided estimated to be in the region of €2 billion.

In terms of the outcome of the current approach to flood insurance, according to EU level data, Ireland has an above average rate of flood cover relative to the EU. However, it is acknowledged that some households are still experiencing difficulties, particularly in areas with demountable flood defences which require varying degrees of human intervention in their installation. Where Government has invested in flood defences, I and Minister of State Troy have emphasised to the CEOs of the major insurers in Ireland the Government’s reasonable expectation is that the industry should improve the level of cover in areas where flood defences exist. In order to address the issue of flood coverage levels in areas with demountable defences, continued engagement with all relevant stakeholders is key. This is facilitated through the Memorandum of Understanding (MoU) between the OPW and Insurance Ireland. Under this arrangement, the OPW provide information on all completed flood defence schemes (including on demountable ones) to Insurance Ireland, the representative body of the insurance industry. In turn, insurers take into account this information when assessing exposure to flood risk within these areas. Officials from the Departments of Finance; Housing and Local Government, along with other stakeholders engage constructively with this process on how the levels of insurance cover might be improved in areas where flood defence works have been completed.

Following the damage caused by recent storm events, Minister of State Troy met with officials from Insurance Ireland and the CEO’s of the major insurers to discuss the insurance sector’s response to claims arising from Storm Éowyn and to reaffirm Government’s expectation that insurers act with urgency, efficiency and fairness in supporting policyholders impacted by the storm.

Alternative flood insurance models have been considered by the Department of Finance in its review of policy in relation to flood insurance in 2016, and the ‘Public Consultation on Climate Change and Insurance’ in 2019. It was found that alternative approaches, including legislating for compulsory cover would have limited impact on the availability of flood cover. Mandating the provision of flood cover would result in, amongst other things: an increase in premia for all property insurance policies; the risk that insurers decide to withdraw from the market; and the potential contravention of EU rules.

Separate to this, the Department of Finance, in its review of policy in relation to flood insurance previously examined the UK’s flood insurance scheme to underwrite flood risk, known as “Flood Re.” This focused on the applicability of the Flood Re initiative for flood cover in Ireland and concluded this approach could lead to an increase in the cost of insurance and a potential financial exposure to the State. Given that the Flood Re system depends on the UK private reinsurance market, there is currently no evidence that the Irish reinsurance market could sustain any form of a Flood Re model. Furthermore, the scale of the UK home insurance market means it is in a position to support the financial impact of Flood Re across policyholders.

More widely, Ireland is deeply engaged in the policy debate around climate-related risks, both at the EU level, including engaging with The European Insurance and Occupational Pensions Authority (EIOPA), and globally through forums like the OECD and we will continue to contribute positively through these channels. My officials will continue to be active and monitor developments at EU and international level and assess flood insurance matters, including through participation in the OPW and Insurance Ireland Working Group. These matters remain a priority for this Government and efforts continue to be made to encourage a responsive approach from the insurance industry.