Insurance Ireland has proposed a new €24 annual levy on every insured household to establish a sustainable flood insurance fund aimed at closing what it describes as Ireland’s growing flood insurance protection gap.
The representative body for insurers said the proposed fund would help ensure homeowners in areas at high risk of flooding can continue to access insurance where cover might otherwise become unavailable.
Insurance Ireland said the Government could consider adjusting existing insurance levies alongside the new charge, potentially allowing the measures to be introduced with “broadly no net additional cost to the average household.”
Research by the Central Bank indicates that around 5% of households currently have difficulty obtaining flood insurance. Insurance Ireland said the consequences can extend beyond the immediate financial risk of flooding, with some homeowners also facing difficulties securing mortgages or selling their properties.
The proposals form part of a wider framework put forward by the industry body to improve Ireland’s resilience to flooding and climate change.
Insurance Ireland is also calling for a grant-supported scheme to help homeowners make their properties more resistant to flooding. Measures could include flood doors and barriers, self-closing airbricks, non-return valves, raised electrical sockets and flood-resistant flooring.
It has proposed introducing a new flood performance certificate, modelled on the Building Energy Rating system, to assess the resilience of homes to flood risk.
The group is also seeking stronger planning requirements to prevent new developments from creating avoidable flood risks, particularly in areas already considered vulnerable to flooding.
It wants continued investment in major flood defence infrastructure, alongside improved sharing and coordination of flood-risk information between relevant organisations.
A dedicated national flood agency is proposed to oversee the system, including administration of the insurance fund, flood-risk scoring, certification and coordination between stakeholders.
Insurance Ireland said its modelling of approximately 1.9 million residential properties showed that just 8% of homes account for almost half of expected flood-related losses.
The analysis estimates annual flood-related costs to residential properties at €56.2 million, comprising €47.8 million from inland flooding and €8.4 million from coastal flooding.
It also estimates that a severe flood event with an average return period of 200 years could cause around €791 million in damage, which Insurance Ireland said is “beyond what the current market can absorb.”
Insurance Ireland chief executive Moyagh Murdock said flooding had become a wider national challenge rather than an issue confined to the insurance sector.
“It is a housing, climate resilience and financial stability challenge that requires a coordinated national response,” she said.
Ms Murdock said being unable to obtain flood insurance could have serious consequences for homeowners, including difficulties securing a mortgage and eventually selling their property.
“Our objective is to provide a sustainable pathway to flood cover for existing homeowners while, critically, reducing the underlying risk that Ireland will face in the years ahead,” she said.
Minister of State with responsibility for insurance Robert Troy welcomed the proposals, saying ensuring the availability and affordability of flood insurance was a key priority as climate change increases flood risk.
The Government's newly established Flood Insurance Protection Gap Working Group will examine the recommendations as part of its consideration of potential policy responses.
However, the Alliance for Insurance Reform said any new approach must make clear “who pays, who benefits and what policyholders receive in return.”
The group said it supported efforts to address the insurance protection gap but argued that the proposals required detailed examination, particularly the funding arrangements and the possibility of reallocating existing insurance levies.
It said the Government working group was the appropriate forum for considering the proposals and stressed that policyholders, including businesses and SMEs, should have a meaningful role in the process.
