After the floods, here comes the tsunami of political soundbites
Pointing the finger at the insurance industry is no substitute for a coherent policy on flood risk
Published 10/01/2016 | 02:30
It is impossible not to feel sympathy for homeowners affected by the unprecedented flooding around the country. But there should be less sympathy for the dam-burst of instant political reactions. Sinn Fein leader Gerry Adams was even driven to condemn as "insulting" the whistle-stop tours of flooded areas by politicians. He was speaking in Limerick during his whistle-stop tour of flooded areas.
The soundbite reactions have included demands that the Government build flood-proof defences in every threatened area and generally bury the problem in concrete. There have also been calls for the insurance industry to magic up some money, specifically to extend cover, at normal premiums, to householders stuck with uninsurable properties.
Taoiseach Enda Kenny has scheduled what he rather ominously promised would be "frank discussions" with the insurers on Tuesday. They will doubtless remind him that several insurers have gone bust in recent years and that others have had to raise extra capital - they have a regulatory obligation to stay solvent. The floods, and the sound-bites, will subside in a week or two and a more considered response is needed.
Some of those whose properties have been flooded were unable to obtain insurance and many more householders and commercial property owners in at-risk areas will shortly face the prospect that the companies will no longer offer them flood cover. But pointing the finger at the insurance companies is no substitute for a coherent policy on flood risk - the problem has been caused by flooding, not by insurance companies. The companies cannot bet on the bull in a bullfight, any more than a bookmaker can lay the odds on a one-horse race. An insurance company which knowingly wrote loss-making business on a large scale would quickly get into trouble with the regulator. The regulator is the Central Bank, ironically implementing since January 1 a new EU directive, called Solvency II, which tightens the rules about careless underwriting. Insurance companies, the custodians of policyholders' funds, are required to stay solvent, and writing risky business for low premiums is the well-trodden path to insolvency.
Household policies, which cover not just flood damage but also fire and other hazards, cost €400 or €500 for a typical home. In Britain the average cost of flood claims has been reported at over €40,000. Any insurer which accepted such bets, in the knowledge that they would pay out every few years in flood-prone areas, would deserve the sanction of a diligent regulator.
There is an additional problem: many people are seriously under-insured, with cover which falls well short of repair costs when disaster strikes. Any government programme which, at taxpayer expense or through leaning on the insurance companies, delivers compensation to uninsured, or under-insured, property owners undermines the incentive to insure adequately. Why pay premiums if the tab is covered anyway?
Some politicians have been candid enough to admit that it is impractical to defend some properties on flood-plains. According to experienced engineers it is not even technically possible to ensure that every building in the country is physically secured against flood risk, even if public funds were plentiful. Since public funds are scarce, choices will have to be faced: some inexpensive flood defences would protect valuable property while others would save assets worth less than the costs of the defences.
The evidence is mounting that flood-risk has risen and will rise further with ongoing climate change. If sea levels rise (some climate scientists expect by as much as half a metre over the next few decades) coastal cities and towns hitherto spared will join the list of at-risk locations, and problems will worsen up-river. Built-up coastal towns must be a higher priority than marginal farmland. Moreover, the engineers warn that flood defences in one locality can shift the problem somewhere else and that local pressure for river-dredging should sometimes be resisted, for fear of unintended consequences.
The evidence that the earth's climate is changing has been stacking up for decades, due mainly to the efforts of the UN's Intergovernmental Panel on Climate Change. In the longer term, continued global warming will likely exacerbate both the incidence and severity of floods in Western Europe, according to the best information available.
Since Ireland does not have an independent climate (it just has weather) there is nothing that unilateral action here can do to slow the build-up of greenhouse gases in the earth's atmosphere.
Ireland is responsible for just one tonne in 500 of global carbon emissions. But changes in land-use patterns are also contributing to the increased incidence and severity of flooding. There were disastrous floods in Somerset in England's southwest last year. UK government agencies had warned, without effect, about the impact of certain kinds of tillage farming, which leaves land bare through the rainy season and encourages run-off and the silting of rivers. They have been urging changes to farming practices in certain parts of England. Here in Ireland, there is evidence that increased grazing of upland areas reduces vegetation cover and hence the natural absorptive capacity of the hills and mountains. They cease to act as sponges, slowing the release of the seasonal rains. This increases flood risk downstream. Faster river flow damages bridges.
The most important error in land-use planning is when buildings are constructed in places better left undeveloped. Irish rivers are slow-moving, and slow-moving rivers need floodplains. Build on the floodplains and do not be surprised if the result is problematic. Gerry Adams, Green party leader Eamon Ryan and many others have raised the issue of planning failures in recent decades: during the building frenzy, local authorities appear to have permitted development on sites where flood risk should have been foreseen.
If there has indeed been negligence by planning authorities, people around the country who unwittingly bought, or built, houses on known flood plains could have a legitimate claim for compensation. It would be a valuable exercise to document each development undertaken in recent decades which has subsequently experienced flooding or the denial of insurance. Every one of these had planning permission and it should be easy to review the planning files. What objections were raised by the planners, were they ignored, or were they never made?
Today's denial-of-insurance problems are clearly related to planning errors in the past. Insurance companies exist in order to pool the public's exposure to moderate or low risks, not to pretend that high risks can be magicked away by denying their existence.
A comprehensive inquiry into flood risk assessment by planning authorities over the last few decades would be valuable. Proposed buildings located in areas likely to prove uninsurable should never have been granted planning permission. Nor should mortgage providers be protected from mistakes in issuing loans in flood-prone areas.
There are good reasons for seeking reform of the local authority planning system in Ireland, the source of so many political scandals, but the flooding experience in recent years suggests one simple change. Any proposed development should require evidence that at least one insurer is willing to provide cover for a minimum period. Had such a requirement been in place these last 20 or 30 years, how much needless public expense and private heartache would have been avoided?