Finance chiefs shoot down plans for flood insurance levy
Published 09/11/2016 | 02:30
The Department of Finance has shot down plans to introduce an annual levy of up to €24 on all home insurance policies to fund flood insurance claims.
A report from the Interdepartmental Flood Policy Co-ordination Group says some 8,547 properties across the State are located in high risk areas, where owners "struggle" to obtain flood insurance.
The report, which was published by OPW Minister Seán Canney, recommends the provision of €2m to relocate families living in flood-prone areas.
The scheme will be voluntary and targeted predominantly at homeowners living in areas flooded in recent years.
"This is a targeted humanitarian aid scheme for those primary residential properties that flooded during last winter and had flooded in previous years, to ensure those worst affected homeowners have a primary residence," Mr Canney said.
"It is critical that the Government investment is targeted at those homeowners at greatest risk of future flooding and [who] would gain greatest benefit from State support to relocate," he added.
But it has emerged Mr Canney's officials also considered the development of an insurance pool where all households would qualify for flood insurance. Such a proposal would have seen a levy applied to each policy which would be placed in a central fund for use in the event of flooding.
This fund would cover claims totalling between €17m and €31m, and would require an annual levy of between €13 and €24 per household insurance policy.
But the move was shot down, in part because it would add between 3pc and 5pc to each household policy, on top of the 3pc stamp duty and the 2pc insurance compensation fund levy currently in force.
It would also require the State to provide a backstop in the event of a catastrophic flood event to cover the cost of claims, which could amount to €185m.
Instead, the Department of Finance has recommended that the current approach be continued, where the State invests in flood defences which increases the likelihood of securing cover, while working with the insurance industry.
The State intends to spend €430m between 2016 and 2021 on flood defence works, which will be completed on a priority basis.
The report said there would be surveys on the availability of insurance in the areas in which defences are going to be built to determine coverage.
Once defences are completed, the survey should be followed up to determine if insurance is being provided in protected areas.
It also said more in-depth data needed to be exchanged between the OPW and insurance companies, and that they will meet every quarter instead of on an ad-hoc basis.
Another measure now on the table, according to Mr Canney, is the consideration of the dredging of the River Shannon.
The report also says a feasibility study will be carried out into the setting-up of a farm building relocation scheme in a bid to assist farmers whose assets are damaged by floods.
Speaking after securing Cabinet approval for the plan, Mr Canney said the annual allocation for flood defence works will more than double in the next five years from €45m to €100m and in overall terms is similar to the investment made over the past 20 years.
The Galway East TD said he also expects the new national flood forecasting and warning system to be up and running in the coming months.