As the Republic prepares for the first named storm of the season — Storm Ashley — to hit this weekend, the Central Bank of Ireland and Minister for Finance Jack Chambers have waded into the thorny issue of flood cover.
The bank estimated in a report published earlier this week that 5 per cent of property owners in the State would be refused flood insurance or have fewer insurers willing to provide cover if they applied for it today.
The flood protection gap, the shortfall between the cost of flooding in the Republic and the portion of that cost that is insured, is an issue of growing concern as flood risk continues to increase due to climate change.
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It puts the average annual cost of flooding in the country at just over €100 million — 90 per cent of which is associated with higher flood-risk buildings, the owners of which either cannot get the building insured or have difficulty doing so. Losses in a quarter-of-a-century flooding event would top €510 million, it said.
With Insurance Ireland, the industry lobby group, saying consistently the sector “can only cover events that are unforeseen or unlikely, not inevitable”, households and businesses that suffer losses as a result of flooding face the unsatisfactory situation of going cap in hand to agents of the Government to tap humanitarian schemes that usually still leave them out of pocket.
The central bank report led to a repeat of calls in some quarters for a national insurance fund, similar to that in the UK, funded by levies on property policies. It essentially works as a reinsurance scheme, where insurers offering home policies can pass on the flood risk element to the national programme for a fixed price. There is little sign of real traction around such an idea in this country.
Addressing the issue of flooding coverage at an insurance conference in Dublin on Thursday, Chambers highlighted that €1.3 billion has been committed to the delivery of flood relief schemes over the lifetime of the National Development Plan to 2030. The aim is to make more properties insurable for flooding risk.
But he pushed back at any notion of the State being a flooding coverage provider of last resort.
“We believe any future approach to policy will need to be carefully considered and mitigate any unintended risk of moral hazard in the context of any possible State role,” he said.
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