Saturday 22 October 2016

Enda has neither carrot nor stick to change the minds of insurance firms on flood areas

Published 13/01/2016 | 02:30

Taoiseach Enda Kenny
Taoiseach Enda Kenny

A boxing match between Goliath and Goliath is unlikely to produce any winner but there can be plenty of disappointed people in the wings.

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And that is likely to be the outcome of the Government's battle with the insurance companies.

Two groups of people that we love to hate met in Government Buildings yesterday for a "frank conversation" over why tens of thousands of families living in flood plains can't get insurance for homes and businesses.

The answer, of course, is that the insurance companies work to make profits.

It's not their fault that years of bad planning combined with freak weather events have left communities devastated.

And they are not charities that will take pity on the people affected.

Flood defences installed along the Dodder in the Ballsbridge area of Dublin have been successful in recent years - but still homes in the area are blocked out of the market.

The Government's approach now is to "educate" insurers on how flood defences work and hope that the companies change their attitude.

Taoiseach Enda Kenny made the point that money is being pumped into protecting towns and villages and said insurers need to acknowledge that by reopening their books to residents in those areas.

Ministers are suspicious of the logic used by insurance companies when excluding certain towns from flood insurance.

They believe that talk of demountables (removable flood walls) not offering sufficient protection is "an excuse" or "a red herring".

That may well be true. But without legislation, the insurance companies can continue to use that excuse without fear of retribution.

The Government doesn't want to introduce laws forcing insurers to provide cover to everyone because that would "drive companies out of the country". The other option is a levy on every home in the country in order to subsidise cover for families in flood prone areas.

That works in the UK, where each house insurance premium includes a levy of around £10. But with a population the size of Ireland, the charge would need to be considerably higher and would therefore test the solidarity of other homeowners.

So expect insurance companies to look after their bottom lines despite the pressure for change.

Ultimately, the problem is that the Government has neither a carrot nor a stick for the insurance companies.

Irish Independent

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