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Saturday 30 August 2014

Insurance firms: we're close to deal to help flood victims

John Downing and Eoghan MacConnell

Published 19/03/2014 | 02:30

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INSURANCE companies insist that they are close to agreeing new arrangements with government to help ease the plight of some of the 50,000 families who cannot get flood insurance.

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The response came after Environment Minister Phil Hogan said the time had come to consider "a levy on all insurance products" to fund efforts to aid flood victims who cannot buy their own insurance.

Department of the Envirnment officials last night repeated that there remained a feeling of frustration with the insurance industry over this and warned the matter must be resolved soon.

The flashpoint centres on large numbers of people being refused flood insurance and the industry's failure to re-evaluate flood risks in areas where multi-million-euro flood defences had been put in place.

This had led to suggestions of another 1pc levy – this would bring total levies on insurance to 6pc.

But Kevin Thompson, chief executive of Insurance Ireland, which represents the industry, said he believed new risk assessment schemes could be agreed with the Office of Public Works (OPW) within the coming month.

Mr Thompson said Insurance Ireland had actively engaged in complex talks with the OPW and swapped detailed plans about flood defences at 12 different sites.

"I am disappointed by Minister Hogan's comments as I believe they do not reflect reality. We have had a good engagement with OPW and we are close to signing off on a memorandum of understanding with them hopefully within the next month," Mr Thompson told the Irish Independent.

DENIED

Mr Thompson said it was too early to say how many of the country's families denied insurance would actually benefit from a change of regime. He said that insurance companies would be assessing risk and offering cover on commercial criteria.

Labour Dublin South East TD Kevin Humphreys said Insurance Ireland's response was welcome. "But we must await the details of these agreements to see what has changed. This has been a long time coming," he said.

The Junior Minister responsible for OPW, Brian Hayes, said a report on the entire issue would be brought to Government shortly.

Mr Hayes was speaking during a visit to a €1.8m flood management scheme at Whitehall Estate in Tullamore, Co Offaly.

"The primary issue at the moment is to make sure that when we put a flood defence scheme in place, and when the taxpayers fund that scheme, that the insurance industry then provides flood cover," Mr Hayes said.

"I hope to be in a position to announce a memorandum of understanding with them over the coming weeks when we get final agreement from them."

Mr Hayes said the idea of a levy would have to be looked at carefully. "Somewhere between 40,000 to 50,000 homeowners cannot get flood insurance at the moment, we need to find a solution to that. Whether the levy solution is a solution we will have to wait and see," he said.

Mr Hayes warned that the idea of a levy raised its own problems, and indicated that he was personally not fully convinced it would work. He said taxpayers could be forced to stump up more money if a fund created in this way was overspent.

"The last time it was looked upon in 2010 it was a negative result because of the fact that we were going into a bailout programme, the fact that the contingent liability was so significant, so these are issues that we are going to have to look at closely," he added.

Irish Independent

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