Some 5 per cent of property owners in Ireland would be refused flood insurance or have fewer insurers willing to provide cover if they applied for it today, a new Central Bank of Ireland report has revealed, adding to the average annual economic cost of inland flooding.
The flood protection gap, the shortfall between the cost of flooding in the Republic and the portion of that cost that is insured, is an issue of growing concern as flood risk continues to increase due to climate change.
Research conducted by the Central Bank has found that the average annual cost of flooding in the Republic is €101 million.
However, severe losses can be much higher, the regulator said, with a €510 million loss expected around once every 25 years.
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These figures do not include the estimates for coastal flooding, which is intensifying due to climate change and could increase the annual average cost “significantly”, the Central Bank said.
Around 89 per cent of the average €101 million cost is associated with higher flood risk buildings, the owners of which either cannot get the building insured or have difficulty doing so
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More than half of the gap is concentrated in Dublin, Cork, Kildare, Clare and Louth, because of their respective population densities and also the specific flood risks associated with those counties.
“Lack of access to insurance can and does affect Irish communities and businesses in a very real way, as we have seen again recently,” said Central Bank deputy governor Sharon Donnery.
“We at the Central Bank are committed to identifying and managing the risks of climate change for the financial system, and so the report we are publishing today seeks to understand the flood protection gap now and into the future.”
Ms Donnery said the analysis should “inform the debate” on the issue in the Republic, which requires input from “a broad range of stakeholders”.
The report concludes that the risk of flooding is set to grow over the coming years due to climate change. “As with many other aspects of climate change, it cannot be assumed that current approaches to flood risk management will remain viable,” the Central Bank said. “There is a serious risk of complacency that must be avoided.”
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