Payback time for the f loods. We could all be hit with €20 bill

A NEW ‘Flood-Plus’ insurance scheme may cost all householders an extra €20 on their annual premiums to offset the rising risks of flooding over the next 10 years.

The levy could be set at between 3% and 5% on domestic policies according to some brokers.

On Tuesday, Taoiseach Enda Kenny will meet the insurance industry lobby to seek flood-risk insurance for thousands of homeowners in Mayo, Galway, Offaly, Westmeath, Clare, Tipperary, Limerick, Waterford, Wexford, Cork, Kilkenny and Carlow.

However, insurers such as Allianz, Zurich, Royal Sun Alliance and AXA are expected to tell him that the situation is the fault of politicians who allowed estates to be built on river floodplains.

Paul Kavanagh, former president of the Irish Brokers Association, this weekend said that before a new levy is considered, the public must be told what happened the 25year-old PMPA 3% levy, which is still being deducted even though all the collapsed firm’s liabilities were paid off years ago.

Insurance policyholders are also paying an annual 2% levy to bail out Quinn Insurance.

A new levy of between 3% and 5% on household policies would be needed, Mr Kavanagh said.

That would cost the typical homeowner €15 to €25 extra on top of average policies costing between €300 and €500 a year.

Mr Kavanagh, managing director of McCarthy Insurance Brokers in Cork, said customers in towns such as Mallow, Clonmel and Fermoy – where flood prevention works have been carried out – are still being denied cover: ‘The latest move by insurers is that they will not cover “demountable” barriers, which are the type introduced in these towns by the OPW. The Taoiseach needs to engage in serious talking with the companies as the Government is not likely to introduce a new levy before a General Election,’ he said.

The insurance company bosses will tell Mr Kenny that floods are more a certainty than an insurable risk at this stage in areas near big rivers such as the Shannon, Suir, Nore, Blackwater and Lee.

The days of flooded homes being a ‘once in a century’ event have long passed since the big national floods in 1995.

These were followed by even worse flooding in 2009, costing an estimated €250m in claims – a figure that has been exceeded over the past four weeks.

Mr Kenny has asked the former Irish Insurance Federation, now called Insurance Ireland, to come up with a system to extend flood insurance cover to high-risk homes and businesses.

Declan Jackson, the lobby group’s government affairs manager, will be tasked with designing proposals to placate the Government between now and the election.

The insurance industry is expected to recommend a version of the approach in Northern Ireland, known as ‘Flood-Re’, which separates the flood risk element of a policy in high-risk homes into a separate re-insurance fund.

Payments will be conditional on risk-assessments directly related to flood alleviation interventions by the OPW over the next 10 years.

Insurance Ireland spokeswoman Jane O’Driscoll was unavailable to comment this week on the Government’s demands for more support from the industry.

As flood defences increase, the insurable risk will be expected to fall – if the impact of climate change does not outpace engineering solutions.

There is consumer anger that cover has been denied to thousands of customers in Clonmel, Fermoy, Ennis and Mallow after investment in flood defences on the rivers Suir, Fergus and Blackwater.

The insurance lobby is expected to demand a State-funded risk reserve like the State Claims Agency to take the initial risk on the flood element of policies.

In the run-up to Tuesday’s showdown, the Taoiseach said that major insurance companies are making ‘sizeable’ profits in Ireland and must do more for those who have been flooded or face a high risk of being affected.

Insurers will say it is the fault of politicians