National flood insurance fund should be introduced to help ‘uninsurable’, broker says

A national flood insurance fund, accessible only during extreme weather events, should be established to compel insurance firms to support customers affected by future flooding disasters, an online broker has said.

Otherwise, insurance companies will never cover or accept claims from homeowners and business owners who live and operate in areas where the risk of flooding is no longer an “unforeseen” event but an inevitability, Jonathan Hehir, chief executive of online brokers insuremyhouse.ie and insuremyshop.ie said.

Dozens of property owners across the town of Midleton in east Cork are facing thousands of euros in repair costs following widespread damage called by Storm Babet earlier this week. The vast majority of these have been unable to access insurance cover due to previous flooding in the area.

“There is no way insurance companies will provide cover over the next couple of years to an area they know is going to flood,” Mr Hehir said. “The only solution I can think of is to divert around three per cent of our property premiums into a fund that sits like a pool of money and is accessible to insurance companies for people affected by flooding who have insurance.”

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Mr Hehir believes, based on a survey his business carried out after the 2015 floods in Midleton, that goodwill does exist among the general population to support those living in flood risk areas. “I would 100 per cent contribute to a community fund for insurance premiums during flooding and I believe other people would too. That’s the only way to convince insurance firms to pay out, at no cost to themselves.”

Paul Kavanagh, executive director of the Cork-based McCarthy Insurance Group, a broker with 17 nationwide offices, estimates repair costs in some business affected by the latest flooding could reach €500,000. He also warned that successful flood defence works in some parts of Cork have still not enabled people to acquire insurance cover for their homes and businesses. Insurance companies will not take the risk if there’s any chance of human error in demountable defences, he said.

“There needs to be Government push to support these communities. Five years ago there was that push and it looked like insurers would have to introduce a new system to insure people in these situations but there’s no appetite to do that now.”

Chief executive of Insurance Ireland, Moyagh Murdock, admitted that in some areas where flood risks are “an inevitable event rather than a possible occurrence”, insurance cover was “no longer possible”.

“Insurance is meant to cover events that are unforeseen or unlikely, not inevitable”, he said.

Mr Murdock said insurers operate in a “regulated industry” where they must “act with prudent in order to ensure that cover is available and affordable”.

Ireland has an “incredibly high level” of insurance cover for flood and home policies – 97 per cent, she said, although she acknowledged this would provide no comfort to those living in flood-risk areas. She said flood coverage levels were “at their highest where fixed defences are in place” rather than demountable defences, which leave room for human error.

Asked what measures insurance companies were taking for the inevitable rise in flooding disasters as the worldwide climate crisis continues, Ms Murdock said many members had established climate-related units, creating “build-back-better schemes” and were “promoting greater awareness of climate mitigation techniques”.