As the first named storm of the season, Storm Ashley, is set to hit the Republic over the weekend, both the Central Bank of Ireland and Finance Minister Jack Chambers have addressed the contentious topic of flood insurance. In a recent report, the bank projected that 5% of property owners in the State would face rejection or limited options for flood insurance if they were to apply today.
This growing disparity between the actual cost of flooding and the insured amounts, known as the flood protection gap, is of mounting worry as climate change escalates flood risks. The annual flooding damage cost in the Republic is estimated to be just over €100 million, with high-risk buildings accounting for 90% of this expense – owners of these properties either struggle to acquire insurance or can’t get it at all. The damage from a quarter-century flooding event could surpass the €510 million mark, according to the report.
Insurance Ireland, the industry’s representative body, has maintained that the industry “can only cover unexpected or unlikely events, not those that are inevitable”, causing households and businesses affected by flooding to resort to Government humanitarian schemes, which often leave them with financial shortfalls.
Calls for the establishment of a national insurance fund, similar to the UK model funded by property policy levies, have emerged following the Central Bank’s report. The proposed scheme would function as a reinsurance scheme, allowing home policy insurers to offload the flood risk to the national fund at a set price. However, there’s minimal evidence of progress on this front in Ireland.
At an insurance conference on Thursday in Dublin, Chambers elaborated on the €1.3 billion earmarked for the implementation of flood relief programs as part of the National Development Plan till 2030, which is aimed at increasing the number of properties insurable against flood risks. Nonetheless, he dismissed the idea of the State stepping in as the ultimate provider of flood coverage, highlighting the need to cautiously strategize future policies to avoid any unwarranted moral hazard risks tied to potential State roles.