Thursday 23 November 2017

Kenny to put pressure on insurers over cover for flood-risk buildings

The Taoiseach said he wants insurers to address 'the contradiction' between their claims that they are insuring homes where flood defences are put in place, and the stories he is hearing from people on the ground. Brian Lawless/PA Wire
The Taoiseach said he wants insurers to address 'the contradiction' between their claims that they are insuring homes where flood defences are put in place, and the stories he is hearing from people on the ground. Brian Lawless/PA Wire
Directive: Environment Minister Alan Kelly

Charlie Weston, Kevin Doyle and Jane O'Faherty

Insurance companies will come under further pressure over their refusal to cover homes, farms and businesses in areas where the State has built flood defences.

The issue will dominate a crunch meeting between Taoiseach Enda Kenny and the heads of six of the largest insurance companies today.

Insurers are refusing cover to families, farmers and firms in towns which have already had flood defence schemes put in place under the auspices of the Office of Public Works.

Towns like Fermoy and Mallow, in Cork, and Clonmel in Tipperary, have had millions of euro spent on flood defences, but insurers will not cover properties in these areas.

Taoiseach Enda Kenny said he wants insurers to address "the contradiction" between their claims that they are insuring homes where flood defences are put in place, and the stories he is hearing from people on the ground.

"If a premises is insurable then it should be re-insurable. So we need to tease that out first of all with the insurance companies.

"We want to see a situation where people, for their homes, are entitled to have flood cover. Insofar as it is practical, the

flood defences that are in place now and the defences that will be put in place need to be the focus of the insurance companies," Mr Kenny said.

An estimated 50,000 property owners are unable to get cover, with most of this figure made up of homeowners, according to former president of the Irish Brokers' Association Paul Kavanagh.

He said insurers are now querying cover for anyone situated within 500 metres of water. Cover is also being refused to property owners in towns like Fermoy, Clonmel and Mallow because the flood defences were moveable and not fixed in place, he said.

Mr Kavanagh called on the Government to force insurers to cover all forms of flood defences, including areas with demountable barriers. Mr Kavanagh suggested the 3pc levy on all general insurance policies should be used to pay for the cost of building flood defences and compensating those impacted.

The 3pc levy was originally put in place to bail out PMPA, but it is still being deducted even though that firm's liabilities were paid off decades ago.

Chief executives from Aviva, Axa, FBD, RSA, AIG and Zurich are to meet Mr Kenny.

A spokesman for Insurance Ireland defended the stance of insurers refusing to cover properties in areas where removable flood barriers had been built.

Unwilling

Cover could only be provided where fixed flood defences are in place, which is in line with international standards, he said.

"Where fixed defences are in place, cover will be provided," the spokesman said.

Some 70,000 homes have been identified as being at risk of flooding by rivers or the sea, according to OPW studies.

However, at least 30,000 of these homes would not be covered under the Government's €430m flood defence plan.

Insurers are unwilling to insure properties in areas that have already been subject to flooding, maintaining that homes and businesses in these areas are no longer an "insurable risk".

They say it is inevitable these properties will flood again.

The insurers are set to tell the Government that more money must be invested in new flood defences and on updating existing ones before it would agree to any scheme to help those suffering from flood damage. They will argue that if a national levy was imposed to assist those without flood cover, all policyholders would see an increase in their premiums.

Insurance Ireland is to question planning decisions to allow development on flood plains, and may call for legislation to ensure this does not happen in future.

Environment Minister Alan Kelly said he may issue a directive to stop construction on flood plains.

The insurance industry is adamant that insurers are struggling to make profits at the moment because of higher levels of claims, low investment returns and regulatory rule changes.

This contradicts recent statements from the Taoiseach who has insisted that insurers are making big profits, and should do more to help flooded homeowners and businesses.

Any levy on policies would end up being imposed on households, the insurance bosses are set to tell Mr Kenny.

Irish Independent

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