Up to 50,000 homes may be without flood insurance

Experts tell Oireachtas committee insurers taking “combative and adversarial approach to claims”

A Dublin City Council worker keeps watch on flood defence barriers along the Clontarf seafront as a very high tide poses a risk of flooding in December 2012. Photograph: Alan Betson/The Irish Times

A Dublin City Council worker keeps watch on flood defence barriers along the Clontarf seafront as a very high tide poses a risk of flooding in December 2012. Photograph: Alan Betson/The Irish Times

Tue, Apr 16, 2013, 18:12

Between 40,000 and 50,000 homes in the State remain without flood insurance, an Oireachtas committee has heard.

Insurance experts who appeared before the Oireachtas Committee on Environment, Culture and the Gaeltacht today claimed many insurance companies were denying householders in certain areas flood insurance due to problems with ‘geocoding’ of their locations.

The locations included Mallow, Blackpool and Glanmire in Cork, and Clonmel in Tipperary. It was claimed that in one case, a house situated 50 metres above the River Lee was loaded by 100 per cent in a policy.

In some cases claims were being refused because householders had taken out policies online and they had missed assumptions made in the policy document that their property was at least 100 metres from the nearest water source.

The committee also heard insurance companies were deliberately “slowing down” claims, resulting in “claims fatigue” by those seeking to rely on their insurance policies to carry out repairs. In some instances, householders would settle claims for €10,000, for example, but they would only ultimately see about €6,500 paid out.

In addition, insurance companies were seeking to use their own panels of builders to carry out restoration work, it was claimed.

Eamonn Downey of insurance claims specialists Owens McCarthy Ltd and the Irish Claims Consultants Association, told the committee that whistleblower legislation “cannot be introduced quickly enough for us” and that it would reveal the inside story of the practices engaged in by insurance companies.

Mr Downey said insurance firms were encouraging “an adversarial and combative approach” in their investigation and handling of claims.

In some cases flood victims were seeing their next premium quote “quadrupled” with their flood cover taken away. Insurers were also retaining portions of claims even where a sum had been agreed, he said.

He also said insurers were using as a “fall-back” in dealing with claims that their own builder was available to carry out work at “agreed rates”. These rates were “unrepresentative of the construction market” and gave rise to builders operating in the black market, Mr Downey claimed.

“Insurers, through their myriad actions, appear to want to foster an atmosphere in which the repairs are carried out by [non-VAT registered] contractors – hence saving them money.”

He said insurers were attempting to use builders from panels they themselves had established, therefore removing the “right of choice”.

They were also using “unrealistic prices”, which they referred to as “agreed rates” and forcing these practices on loss adjusters.

“The whistleblowers legislation cannot be introduced quickly enough for us,” Mr Downey said.

The Office of Public Works, which is responsible for flood management schemes, said last year that spending had risen almost every year since the economy collapsed.

In 2012, it spent €45 million – up from €23 million in 2007 – on capital schemes, with a further €17 million on maintenance.

The main schemes covered include completion of work at Mallow, Co Cork and Clonmel, Co Tipperary; and commencement of flood relief schemes at Ennis, Co Clare, Fermoy, Co Cork, and Bray, Co Wicklow.