When under pressure, politicians usually promise more than they can deliver. It goes with their chosen image as “fixers”; people who can manipulate the system in favour of clients. But when company profits are involved, that pretence is sharply exposed. It happened when the Government attempted to pressurise the banks into reducing their lending rates. More recently the insurance industry told Taoiseach Enda Kenny it will not provide blanket cover for flooding risks. Few people had expected that it would.
Why do politicians do it? It may be a case of “pass the parcel”, where complaints from the public concerning financial gouging or unfair practices are formally raised with the offending institutions. If nothing else, this can reduce political pressure. In the case of the insurance industry, however, it also generated baseline information on the extent of cover available, while signalling the beginning of a negotiating process.
The response of the industry was self-protective, particularly in relation to demountable flood-defences, where only 78 per cent of insured homes were covered for flood risks, compared to 89 per cent in fixed-defence areas. Both of those figures are too low and should be improved given the amount of public money that has been spent on protection in those areas. Global warming has greatly increased the risk of winter flooding. But, just because a home is located near water should not automatically exclude it from cover, particularly if defences have been put in place.
The meat in this particular sandwich involves a proposal to establish a State-supported compensation scheme – similar to that which exists in the UK – for people unable to secure flood insurance. The industry has offered to explore this option with the Government. Such a scheme may form part of a wider agenda that will include advance warning mechanisms; coordinated response plans and additional hard and soft engineering works to minimise flood impact. It represents another costly and controversial body of work for an incoming government.