The chief executives of Ireland’s main insurance companies have expressed concern over worsening climate change and extreme weather events in a series of high-level meetings discussing future flood cover.
During briefings with Neale Richmond, Minister of State with responsibility for insurance, the sector addressed catastrophic events, weather pattern uncertainty and a decreasing appetite in the reinsurance market to provide flood cover.
Mr Richmond met 10 providers between last April and June to discuss insurance reform and the state of the market. Summary documents obtained under freedom-of-information legislation demonstrate growing unease with regard to flood and home premiums as a consequence of shifting climate and weather patterns.
In a meeting with RSA attended by chief executive Kevin Thompson the company pointed to the “frequency of catastrophic climate events” among upcoming challenges in the market.
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Zurich noted, during a meeting with chief executive Anthony Brennan, that flooding events are worsening in Ireland and abroad due to climate change.
“It explained that the risk of flooding is changing, with the issue of waterlogging and short but intense rain events now a big concern,” a note on their discussion outlined.
Axa chief executive Marguerite Brosnan also met Mr Richmond during which the issue of “increasing natural catastrophe” was raised. The company “explained that the reinsurance market appetite for flood insurance has reduced considerably and trends are not favourable.”
AIG, in a meeting attended by its chief executive Aidan Connaughton, said house insurance required scale for catastrophes with storms posing the greatest threat.
The worsening picture will be of further concern to those most at risk from such weather conditions. In October, tens of thousands of homes and businesses were urged by Minister for State with responsibility for the Office of Public Works Kieran O’Donnell to check their flood risk this winter and to prepare safety plans.
At the same time, a Central Bank report showed 5 per cent of property owners in Ireland would be refused flood insurance or have fewer insurers willing to provide cover in today’s market. It put the average annual cost of flooding at €101 million.
This month, England’s Environment Agency said one in four properties there would be at risk from flooding by mid-century.
During its meeting, Allianz said a levy system akin to FloodRe in the UK “can form part of a solution” to cover provision but “can only go so far with impacts of climate change”.
FloodRe is a reinsurance company enabling providers to insure themselves against flood cover losses. The not-for-profit fund helps promote flood insurance availability in problem areas.
Liberty Insurance similarly highlighted Spain’s Consorcio de Compensación de Seguros (CCS) model although Department of Finance officials noted CCS was exempt from Solvency II – requirements for insurance and reinsurance companies in the European Union – raising challenges for a similar model in Ireland.
The Government has committed to spending €1.3 billion on flood relief schemes by 2030, with about 100 currently in the development or construction stages. The Department of Finance has noted Government expectations that where flood defences are in place, cover can be provided.
During the meetings, Allianz said the roll-out of proper flood defences and land use management – essentially not building on flood plains – was key to reducing risk.
It raised “a risk of demountable (temporarily installed) flood defences not being in place on time and noted historical incidents in Ireland and other countries”, according to the record.
Aviva highlighted the need for more information on where and when demountable flood defences are deployed, while Zurich said “a strong degree of trust” was needed that demountable defences would be properly used.
Both Axa and FBD referenced their use of flood maps. Axa said it buys flood mapping data and “can see if schemes have been successful in reducing flood risk and will offer cover in such cases”.
FBD said it uses local knowledge as well as flood maps to assess risk.
“On demountables, FBD noted that they may be considered at individual policy level but have no standing regarding FBD’s own flood rules,” minutes of the meeting said.
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