"For the past two years the European Commission has been looking at EU Member States' rules on insurance against damage caused by natural catastrophes such as flooding with the aim of assessing whether European action is needed and if so what form should it take.
"The Commission has now told me that it will issue by the end of September its report on 'Natural Catastrophes: Risk Relevance and Insurance Coverage in the European Union', and will then decide what action to take on this issue.
"I believe that high among the options now being considered by the EU is binding EU legislation requiring insurance firms to insure homes at risk of flooding for three main reasons.
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"First, the Floods Directive has been in place since late 2009. This commits the Government and local authorities to assessing and mapping all areas at risk of flooding and to taking action to reduce the risk. In response, Ireland has spent almost a quarter of a billion euro over the past five years on the management of flood risks. For example, flood defences installed at the Tolka river ensured that homes in Drumcondra which had previous been flooded were protected during the heavy rains of October 2011.
"Second, a number of EU countries already have national rules requiring insurance firms to cover certain risks for which there is no market cover or only at excessively high premiums. In Belgium a Tariff Office made up of insurance sector and consumer representatives and the Government prices fire insurance, with premiums and claims related to these risks then distributed among all insurers providing fire insurance policies. In France and Spain a flat-rate pricing system has been introduced with an extra premium of 12% applied on premiums for fire insurance policies.
"And third, the Commission has been considering an EU initiative on the issue of insurance against natural disasters for a number of years. Its 2009 White Paper on adapting to climate change suggested having publicly supported insurance systems where no insurance exists and stated that due to the cross-border effects of climate change, there may be merit in promoting EU-wide insurance as opposed to national or regional schemes."
(CD/GK)
