Flood group: Insurers acting like a cartel

Up to 50,000 Irish homes have either no flood cover or are at serious risk of losing it, while insurance companies operate a cartel to maximise their profits, an Oireachtas committee heard yesterday.

Thousands of houses cannot be mortgaged, are effectively worthless, uninsurable, and in many cases unsaleable, the joint committee on environment, culture, and the Gaeltacht heard.

Delegates from the Irish National Flood Forum said the value of homes and businesses in risk areas has plummeted since the series of floods that have struck parts of the country since 2009.

Insurers are refusing to renew cover even to homes that have never flooded, said the forum’s director, Enda O’Donovan.

Mr O’Donovan, whose home near Skibbereen, Co Cork, was flooded in 2009, castigated insurance companies for ignoring remedial works undertaken by the Office of Public Works and took issue with their system of geo-profiling, which blacklists properties in a given area even if they are not prone to flooding.

Geo-profiling is often inaccurate, he said. It can leave vast swathes of land uninsurable for no good reason and occasionally leads to refusals of flood cover in bizarre circumstances. He cited the case of his parents, who live nearby but whose home is 50m above his.

Mr O’Donovan said the insurance companies, although supposedly in competition with one another, often sing from the same hymn sheet and appear to be operating a cartel.

“Every competitor has the same price product and the same exclusion clauses,” he said. “No provider will even quote if you have had a claim in the past five years, so there is no real competition in Ireland. When you apply for a mortgage you are required to get home insurance, but must buy at an inflated premium from one provider.”

Brendan Dempsey of Cork St Vincent de Paul society said the group nationally had paid more than €1.8m to help straitened householders make flood repairs to their homes.

“The insurance industry here has gone from being equitable to adversarial,” he told the committee, saying many flood claimants were being bullied into accepting settlements that did not cover the cost of repair.

He said insurance companies also went to extreme lengths to avoid paying out on legitimate claims if the insured person has inadvertently forgotten to tick a particular box on a form.

“We have a lady who was refused because they discovered she had not ticked the box on ‘previous claims’.” He said though the claim was small and occurred 18 years before, the insurance firm repudiated the contract on the grounds that she had made a false declaration.

Gillian Powell of Bandon Flood Group said that what was needed was a nationwide government-sponsored catastrophic flood insurance scheme, which was set up in the wake of the 2009 floods that devastated the town.