Kelly plans profit levy on 'stubborn' insurance firms over floods crisis
Published 28/01/2016 | 02:30
Environment Minister Alan Kelly is to propose the introduction of a levy on the profits of insurance companies in response to the industry's "stubborn" approach to the flood crisis.
Mr Kelly will ask his Cabinet colleagues to consider the introduction of a 0.5pc levy on firms' profits in a move that will be strongly resisted by the industry.
The Labour Party deputy leader believes a so-called profit levy, which would require the introduction of legislation, could be used to provide financial help to homeowners and businesses which are being refused flood cover. Mr Kelly also believes the proceeds could be used to fund flood infrastructure in areas worst affected.
But any such move would need Cabinet approval and is unlikely to be agreed before the general election.
The decision by Mr Kelly to raise the prospect of a levy on profits comes as the Government prepares to announce the provision of €106m for local authorities. The funds, which will be announced by Transport Minister Paschal Donohoe, will be earmarked for road and rail repairs.
Mr Donohoe will today acknowledge the toll the floods have had on the lives of families and he will insist that critical repairs are carried out as soon as possible. He will pledge that works will take place in the coming weeks and that his department will continue to engage with local authorities.
The Government's response to the flood crisis has come back under the spotlight after the insurance industry snubbed calls for it to reconsider its refusal to insure all homes in areas where permanent flood defences are already in place.
In a letter to Taoiseach Enda Kenny, the industry made no pledges whatsoever to change its approach, instead encouraging the Government to create its own "social compensation scheme" for homeowners who cannot secure cover.
It also refused to budge on its opposition to temporary flood defences known as 'demountables'. But Mr Kelly is now to press his colleagues for the introduction of a levy solely on firms' profits, which is likely to be in the region of 0.5pc, once other options are exhausted.
"While the preference would be to work in co-operation with insurance companies and come to a common agreements so that people won't feel abandoned (as they currently do), we can't guarantee that co-operation and other measures may have to be considered," Mr Kelly's spokesman said last night. "Mr Kelly is mindful of the residents he met in Clonmel in particular where people miles away from water can't get insurance only because of their address."