FF Bill on flood insurance creates exchequer risk, says Government
Fianna Fáil spokesman Michael McGrath insists relief scheme should lead to cover
Flooding along the banks of the Shannon River near Athlone Town in 2015. Photograph: Brenda Fitzsimons
Fianna Fáil finance spokesman Michael McGrath told the Dáil on Tuesday night the Bill would make it unlawful for an insurance company to discriminate against people and business in areas which now had a low probability of flooding.
Low probability was defined, he said, as an area certified by the Office of Public Works as having a one-in-100-year flood risk or better.
“It is not acceptable that insurance companies continue to deprive households and businesses flood insurance cover when a flood relief scheme has been put in place,” added Mr McGrath.
He said under the Bill the Central Bank would have the power to assess how an individual insurer dealt with applications from individuals in the relevant areas.
“It will also be empowered to direct an insurer to change its practices or take steps necessary to ensure compliance with the legislation,” said Mr McGrath.
“If necessary, the Central Bank could seek an enforcement order in the High Court and an insurer could be subject to significant fines.”
Minister of State for Finance Eoghan Murphy said the proposal created a major financial risk exposure for the exchequer.
There were legal concerns which needed to be assessed, particularly a Central Bank view it ran contrary to the EU legislative framework for insurance insolvency.
“In addition, there may be constitutional issues, with the absence of an appeal mechanism for the regulated financial service providers targeted in the legislation,” he added.