The committee listened to evidence that thousands of houses/businesses (incl.Farmers) are having financial problems as a result of being excluded from insurance as a result of flooding.These people cannot get bank loans to reinvest in their businesses or sell their houses other than to cash buyers.But there is an expectation by local government that they can continue to pay current levels of rates and property tax.How do towns/villages and indeed parts of cities continue be vibrant and places of investment if the lack of flood insurance isn’t resolved?Indeed the rates base for local government will surely collapse in the towns/villages as the rateable valuation cannot be sustained on property that cannot get flood insurance .
Insurance Ireland submitted that current levels of implementation of flood defences need to improve.They call for a prohibition of building on flood plains.
OPW estimates that 5000 properties have benefited from investment in flood schemes amounting in a saving of €900m for insurance companies in terms of damage and loss claims Ref.p11
Kildare County Council and the OPW believe with the investment in CFRAMS the insurance industry will be able to take decisions based on the fullest assessment of risk therefore reducing their exposure to claims.
The idea is that if effective measures are taken which include insurance industry participation the claims cost associated with flooding should decrease and therefore the insurance cost should decrease.This hasn’t happened despite lengthy engagement .
Geocoded areas have been refused cover or had their premiums increased even though their property has never flooded..The committee was also informed of insurance companies placing obstacles in the way of claimants.these include retention of claims and failure to advise claimants of their right to their own representative .Ref P12.This was confirmed after a Central Bank investigation.Ref.P 13.
OECD notes “It important to identify uninsured populations and sectors of the economy that are financially vulnerable and assess the reasons why they lack insurance”.Ref.P.19.
Insurance companies operate in a global market and spread their risk around the world using numerous specialist reinsurance companies,Ref.P23.Therefore the insurance companies around the world share the cost of clams in Ireland .It is not clear how much of the payments made in Ireland were paid by the insurance industry in Ireland or by this hedging .
Insurance Ireland claims only 2% of property is excluded from flood cover.This figure needs to be verified and also put in context.Many of the centres of towns/Cities have in excess of 90% of property with no flood cover or with large policy excesses e.g.Fermoy,Mallow,Clonmel,Cork and Ballinasloe to name a few.
Chairman said a situation cannot be allowed to develop where large numbers of households are deemed to be outside normal insurance schemes. Ref.P 29.
The Chairman said that parts of the country deemed flood risks 15 years ago have had major relief works carried out to prevent further problems.However,they are still zoned as being a flood risk.Ref.P30.
Insurance Ireland informed the committee in June 2012 floods led to 1260 claims costing €54m.Seven other significant events in Ireland and the cumulative cost in total was €697m.They do not confirm how much of this payment was”hedged.”They also didn’t confirm how much Flood Insurance premium was paid to insurance companies over this period.Ref.P35.
Deputy Catherine Murphy noted that it seemed to the Deputy that the investment by by the OPW in remediation still had no effect and those living within 500 metres of a watercourse were still refused flood insurance.Ref.P35.
Insurance Ireland had communicated to the OPW that Insurance Ireland needs to confirm the design standards to which the flood defences are constructed.Their acceptable minimum standard is a return period of 1 in 100 years.Ref.P36.
Deputy Kevin Humphrey’s notes evidence from Insurance Ireland representative “Mr Thompson is giving us a figure as to what the industry paid out on flood over the past 12 years but he is not able to give us the figure of profit margins.It would be good if Insurance Ireland could provide the profit margins of its members over those 12years”.Ref.P40.
Insurance Ireland stated OPW in 2004 was given the responsibility of being the lead agency for flood risk management.Between 2004 and 2011 it was allocated a capital budget of €257m but had only spent €188m.Ref.P41.
Insurance Ireland submitted that the number of agencies involved can lead to confusion and inaction in managing flood risk.Amongst its requests were a clear publicly available Flood Relief capital works programme specifying priorities,budgets,targets and timelines.Swifter completion of structural defences.Ref.P42.
Insurance Ireland pointed out the OPW’s project implementation process has six stages and it takes six to ten years to get from design stage to execution.Ref.P46.
Insurance Ireland believes the 2009 Planning Guidelines (on Flood Risk Management) are deficient.They stated that future availability and affordability of flood insurance were not considered at the preparation stage and planning authorities are not obliged to follow them.Ref.P48.The committee agrees that these guidelines need to be reviewed.
Mr.Kemp replied re the OPW delivered flood schemes “that what Insurance Ireland needed was not just provision of information after the event,but involvement in design process and agreeing standards before the event .”Ref.P54.
Deputy Kevin Humphrey’s “the parties are still trying to talk the same language .
OPW operates to an international standard applying the figures of 100,150 and 200.
Insurance Ireland is dragging its heels regarding the acceptance of these international standards.” Ref.P57.
Deputy Catherine Murphy expressed concern about the CFRAM study as the UK Times reported thousands of homes could lose value and become more expensive to insure.Ref.P61.
Ms Josephine Feehily,Chairperson of the Revenue Commissioners,to a hearing of the Public Accounts on 21 February 2013,said that flooding will impact on property tax valuations.Ref.P64
Figures released by the Irish Brokers Assoc. up to 50000 households have no flood insurance.Ref.P64
Mr Downey alleged that insurance companies retain part of agreed claims settlements incorrectly.They behaved differently abroad.The retention practice is not evident in Belfast or Bristol.Ref.P72.Mr Downey also alleged that insurers have ignored the Consumer Protection Code by not advising homeowners who notify a claim of their right to retain their own representative .Ref.P 73.This was confirmed by a Central Bank investigation of insurance companies.Ref.P77
The Central Bank reviewed 188 flood claims it found the following:
Incidences of potentially unfair settlements.
A lack of transparency by insurance companies with retaining partial claims.
Failure by insurance companies to advise claimants that they can appoint their own Assessor.Ref.P76,P77&P78.
IFA key solutions.An early warning system.A policy of allowing water to move when heavy rainfall is forecast.Essential maintenance work to be carried out.Ref.P92
Kildare County Council state that despite the Council having delivered a scheme that insurance is still not available in that area.Ref.P94
Mr.Dempsey told the Committee that the SVP believes the lack of flood insurance can only be addressed through legislation.Ref.P120.
Senator Labhras O Murchu believes there is no difference between having universal health insurance and the same re flood insurance for property.Ref.P126.
The Memorandum of Understanding came into effect on 1st June 2014 “it is expected that availability of flood insurance in affected areas will increase”
To date the OPW has provided data in the agreed format to Insurance Ireland.Insurance Ireland members are committed to take this information into account when assessing exposure to flood risk within these areas.Early indications from the insurance sector are that flood risk insurance is widely available where flood relief schemes have been completed by the OPW(THIS IS INACCURATE AND THE INFF HAVE A SURVEY TO PROVE THIS).It expects to receive in the near future results of a more recent survey by Insurance Ireland on this subject Ref.P132.This survey promised by the insurance industry is not included in this Oireachtas Report.
Planning Guidelines ban building on flood plains/low-lying coastal areas
Central Bank to investigate householders affected by geo-coding
OPW to carry out essential maintenance of Shannon,develop early warning system and the State investment to be sustained and targeted.
A partnership between the Insurance companies and the government may be required for property owners without flood insurance so as to provide cover.
If all proposed solutions have been exhausted legislation should be introduced to compel insurance companies to provide flood insurance.Ref.P136-P140.