Insurance in Flood Areas

Recent years have seen many communities drastically affected by coastal and river flooding. As well as the trauma of the initial damage, this has ongoing effects on householders and business people as they become unable to obtain affordable, or even any, insurance cover. The Office of Public Works has carried out extensive flood relief works in many affected areas, spending over €500 million to date with over €200 million committed to. Despite this huge investment of taxpayers’ money to rectify problems, people are still being refused insurance cover in those areas. For example people in Mallow and Fermoy are still being refused cover, despite completed flood relief works costing €57 million in those areas.

This policy of adverse selection is allowed under the current Memorandum of Understanding with the Insurance industry and does not reflect the reduced risk resulting from the huge state investment.
The OPW is currently nearing completion of the CFRAM (Catchment Flood Risk Assessment and Management) mapping project. The reason for this mapping is three fold:
• To comply with EU directives;
• to help plan for and alleviate flooding in communities; and
• to highlight areas which should not be built on or developed.

300 communities have been identified as threatened by flooding under this programme. As this data is available to insurance companies, we are concerned it will be used to discriminate against homes and businesses in these communities, denying them access to affordable, or perhaps any, insurance.
Other countries employ various risk equalisation policies to ensure buildings insurance is available to all. This can be achieved for example through a community rating scheme (as used for health insurance) or a central fund (as used for uninsured drivers).

We request the Minister firstly to replace the current Memorandum of Understanding with the Insurance industry to reflect the huge state investment and subsequent lowering of risk. We also suggest the use of flood data to support a policy of adverse selection be limited. This will help to ensure people can continue to live in their homes and businesses can continue to operate. Otherwise communities with a history, or even a slight future risk, of flooding face extinction. This has obvious implications for homelessness, economic decline, and infrastructure planning.

Summary Solutions:
• Replace the current Memorandum of Understanding with an agreement which ensures that once flood prevention schemes have been completed by the OPW to the international standard of 1:100 year event ALL property owners in these areas can avail of competitive insurance