Government snubs flooded firms in fight for insurance

Noonan says State can’t intervene as deluged businesses on coast struggle to find cover

BUSINESSES struggling to find adequate insurance cover following last year’s devastating floods will receive no help from the Government after Finance Minister Michael Noonan conceded his hands are tied on the matter.

Hundreds of businesses in coastal areas have been refused insurance by companies because of calculations and presumptions that climate change will cause further flood damage in the future.

Many insurers say businesses are being adversely affected by rising sea levels and so are deemed an uninsurable risk when looking for a new policy.

Mr Noonan said this was a commercial matter that the Government and Central Bank could not interfere with.

“This position is reinforced by the EU framework for insurance which expressly prohibits member states from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products,” said the minister.

“The provision of insurance is a commercial matter for insurance companies, which has to be based on a proper assessment of the risks they are accepting.

“This assessment will in relation to coastal communities, in many cases include insurers’ own climate change presumptions based on their own modelling and research. Consequently, neither the Government nor the Central Bank has any influence over this matter.”

He added that the Government had studied the risks posed to homeowners and businesses in 90 coastal communities around the country.

These studies, in areas deemed to face ‘potentially significant’ risk, looked at the future sustainability of such communities.

Mr Noonan said families and business also had a right to lodge complaints with the Financial Services Ombudsman if they felt they were being harshly treated by insurers.

“Measures to address the risks identified were set out in draft flood risk management plans that were published in 2016 for consultation,” he said.

“Also, in line with the sectoral adaptation plan for flood risk management, prepared by the OPW under the Climate Action and Low Carbon Development Act 2015, the planning and design for flood defence schemes takes climate change into account. This includes the feasible measures being identified through the flood risk management plans.”

The minister’s comments mean businesses in coastal regions will continue to face significant challenges when applying for insurance, just a year after hundreds of families and firms suffered huge disruption in one of the country’s worst floods.

Irish Small and Medium Enterprises Association (ISME) director Neil McDonnell said he was annoyed by the Government’s response to the issue.

“We are not satisfied with the hands-off approach we have seen from government and the Department of Finance,” he said.

He added that the very high premiums some businesses faced could be lowered.

“Our message is that the cost of insurance is a function of the general damages you are allowing the courts to award. If they took a business decision to intervene in general damages it would bring down the cost of insurance.

“Insurance companies should not be forced to insure where there is uninsurable risk but in areas where there is not an excessive risk people should not be paying excessive levels for insurance.

“I am pretty annoyed with the response.”

‘The provision of insurance is a commercial matter for insurers’