State intervention possible if insurers don't respond positively to investment in flood relief

A Government taskforce has been set up to examine possible State intervention if the insurance industry does not respond positively to massive investment in flood relief schemes.

Simon Harris, minister of state at the Office of Public Works (OPW), revealed the move as he unveiled plans yesterday for a €15m flood relief scheme in the Blackpool area of Cork City — an insurance blackspot following years of repeat flooding incidents.

“I hope and expect that when a scheme is completed, like here in Blackpool, that it will be positively reflected in relation to insurance. We’re going to spend more money on flood relief over the next five years than we have in the last 20 years.

“We are going to spend up to €1bn on flood relief nationwide over the next decade. It simply wouldn’t be acceptable to me if we were to spend up to €1bn of taxpayers’ money and people still couldn’t get flood insurance,” he said.

Mr Harris said some form of State intervention is one of several options being considered by a taskforce he has reconvened to examine a series of flood-related issue, including the contentious issue of flood insurance in flood prone areas.

He stressed that no decision has been made yet while the interdepartmental group undertakes its review. But he said it is unlikely legislation will be introduced to force insurance companies to provide cover to homeowners and businesses in areas where flood relief works have been completed.

The taskforce, which includes officials from the Department of Finance, is examining international best practice in this area and is due to report back to the minister next year.

In the meantime, Mr Harris said he expects the insurance industry to honour the terms of a memorandum of understanding agreed between Government and the insurance sector in relation to cover in former flood-risk zones.

Under the terms of the deal, the OPW shares information on its flood relief plans with the insurance industry, which in turn factors completed flood relief projects into their considerations when assessing whether to provide flood insurance in certain areas or not.

In a direct message to the insurance industry, Mr Harris said: “We want to work with you. The OPW will offer as much information as it can about flood relief schemes so the industry can make informed commercial decisions. However, if we do not see that being proactive enough, and if we don’t see it deliver the desired results, where homeowners and businesses can get flood insurance, the Government reserves the right to consider other options.”

The taskforce is due to report next spring.