New insurance levy to pay for flood-hit homes
THE Government is considering a new levy on all insurance policies to create a distress fund to help the 50,000 people who cannot buy flood cover.
The move follows 16 months of talks between the Government and the representative group, Insurance Ireland, which Environment Minister Phil Hogan said were not making any real progress.
The addition of a 1pc charge on home, motor and other policies would bring total levies on insurance products to 6pc. A special 2pc levy introduced in September 2011 to cover losses at Quinn Insurance is expected to continue for another two decades and there is also a longstanding 3pc levy on insurance products.
Mr Hogan is scathingly critical of the insurance companies and said they are not helping people stricken by flood damage.
He has also accused them of not altering flood-risk assessments in areas where millions of euro have recently been spent on effective flood defences on the rivers Dodder and Tolka in Dublin as well as Fermoy, Mallow and Kilkenny.
"I'm disappointed with the engagement of the insurance sector in these matters.
"Whether it's on pyrite, on building control or on flood relief, the insurance sector are not coming to the table with clean hands. They're not coming with a generous spirit to help our citizens at this difficult time," Mr Hogan told the Irish Independent.
“I realise they are private companies. But at the end of the day there’s an obligation on all sectors of the community to help out.
“The ultimate decision the Government and the Minister for Finance can make is to put a levy on all insurance products to create a fund for communities that are in difficulty from floods and storm damage. But we’d prefer a voluntary settlement,” Mr Hogan said.
He said primary responsibility for any levy lay with the Finance Minister and it was too early to speculate on amounts. But well-placed sources suggested a 1pc levy on all insurance products is the most likely option.
Up to a quarter of a million people are affected by the denial of flood insurance to 50,000 homes. This estimate in spring 2013 is likely to increase considerably as the worst winter on record has left many more homes flooded and unlikely to get future flood cover.
The Office of Public Works, on behalf of the Government, began talks with Insurance Ireland in November 2012.
Much of the work is concerned with re-classifying flood risk in places where there has been multi-million euro investment in flood defences, but the Government is clearly frustrated at the lack of progress.
Dublin South East TD Kevin Humphreys, of Labour, said €15m had been spent on flood defences along the River Dodder in Dublin.
“These expensive defences mean a flood risk reduced to ‘one in 200 year events’. Yet the insurance companies continue to deny flood insurance and rely on old data,” Mr Humphreys said.
Mr Humphreys, who has championed the cause of people denied flood insurance for several years, said other governments had found a way of assisting people in this position.
He said the British government is going to levy all home insurance policies to help those denied flood insurance and other governments across the EU came up with a combination of measures.
Insurance Ireland representatives were not available for comment last night. But they have in the past resisted levies and argued that they are working with the Government to find ways of resolving the issue.
Insurance Ireland, previously known as the Irish Insurance Federation, has also said that it expects to pay out some €46m for storm flood damage claims arising from the appalling weather in December and January alone.