Extreme weather events during the year cost hundreds of millions of euro but, with climatologists warning of their increased frequency, the State will be forced to spend more on defences next year.
Insurance premiums are also likely to rise over time.
The most significant weather event of the year was Storm Emma in February and March. It brought the highest snow accumulations since January 1982, forcing schools and businesses to shut. It cost the insurance industry €39 million.
FBD Insurance said the storm cost it €9 million in claims, which was just below the €10 million it faced in claims following Storm Ophelia in October 2017. Ophelia was the worst storm to hit Ireland in half a century.
However, like most insurers, FBD has a “major reinsurance programme” in place which “significantly limits the net cost” to the company in the event of severe weather as it passes the cost to insurers in other jurisdictions.
FBD said winter 2018 saw “a marked increase in the number and severity of storm systems” that passed over Ireland. “We have observed an increase in both the frequency and the severity of weather events in recent years,” it said.
“Climatologists would suggest that extreme weather events may become more frequent and more severe in the future. Against this backdrop FBD will continue to review its pricing models . . . to calculate any impact on future insurance premiums.”
Larger claims
Minister of State at the Department of Finance with special responsibility for the insurance sector Michael D’Arcy said a total of €84 million was paid out by the insurance industry in weather-related claims during the year.
“These events are becoming more frequent which absolutely has to be a concern because that means people will have larger insurance claims,” he told The Irish Times.
However, the outlay was by no means the largest of recent years. The “big freeze” of 2010 cost the insurance industry €300 million. “Pipes froze, subsequently thawed out and then flooded houses,” said Mr D’Arcy.
“The only insurance you’re obliged to have by law is motor insurance, but these events are happening more so people have to be insured. It’s not prudent not to be insured. Property insurance is crucial.”
Mr D’Arcy said it was not necessarily the case that premiums would rise next year, except in cases where claims have been made. “Next year, premiums generally shouldn’t go up, but if you have a claim in or you’ve made a claim, it does go up,” he said.
Mr D’Arcy also acknowledged that there are a number of properties across the State which cannot get insurance due to the likelihood of flood damage, but said there was nothing the Government could do to help them.
“I know there’s a difficulty getting insurance for people whose property has been flooded in the past,” he said. “Companies insure against possible risk, not likely risk. Unfortunately these are commercial decisions being made by companies.”
Is there nothing that can be done for those people?
“There isn’t, because these are commercial decisions being made by companies,” he said. “The Government is expressly excluded by law from interfering in a commercial decision of that nature.”
Insurance Ireland estimated that about 2 per cent of home policies in Ireland do not have flood insurance. “Flooding is a considerable challenge and it can result in utter devastation for those who are impacted,” it said. “No country has a perfect system to deal with the challenges of climate change, flooding and insurance cover, but the key is focusing on sustainable development and investing in defences to build flood protection and flood resilience.”
Insurance Ireland said there are difficulties posed with trying to predict insured losses and increases in premiums because some weather events cause more damage than others.
“For instance, if there is extensive flooding following a storm, the cost of the damage may be higher than damage caused by high winds,” it said. “Also, the concentration of the storm damage in urban or rural areas will impact on the potential insured losses.
“Each severe weather event will have different impacts and it is only after the event when claims are submitted that a true picture of the nature and cost of the damage emerges.”
When extreme weather events occur, it is the remit of the Department of Housing to fund the response, clean-up, and associated costs. These include staff overtime and the hiring of contractors for necessary immediate work.
The department provided figures broken down by local authority for 2018. A total of just under €9.4 million was spent, which was the highest amount since 2010, when the funding amounted to €14.3 million.
Wexford County Council received the most of any local authority last year at €1.2 million. Next in line was Meath County Council, which received just under €770,000, and Wicklow County Council, which got just under €678,000.
Flood defences
One of the ways the State is trying to mitigate its costs, as well as those associated with the insurance industry, and, by extension, consumers, is by building flood defences in high-risk zones. The body charged with this task is the Office of Public Works (OPW).
Liam Basquille, the principal officer in the OPW’s flood project management section, said the budget for flood defences this year was €70 million, and this will increase to €80 million next year.
“Some of the common elements of flood-relief schemes are embankments, which are engineered reinforcements,” he said. “They’re not just lumps of muck. Then there are reinforced concrete flood walls along river banks or quays in cities, and also dredging.
“We have an existing programme of about 35 flood-relief schemes we’ve been working on over a number of years that are at different stages of implementation.
“On top of that, the Government has announced a new package of investment for flood risk management plans for the six main river basin districts. There were a total of 118 projects included in those plans for implementation over the coming years.
“We’ve prioritised 55 of them, mainly based on the level of risk involved and the number of properties affected. All in all, the current programme of work comprises about 90 projects.
“We already have a lot of schemes up and running in major towns such as Mallow, Fermoy, Clonmel, and in Dublin along the Dodder. So there is already a very large degree of protection in place.”
In the immediate term, the OPW has 10 schemes under construction which have a combined value of about €133 million, with the funding spread over the budgets from a number of years. These include works in Bandon, Skibbereen and along the Dodder in Dublin.
“We expect to commence construction next year on a further six schemes. A lot of that will depend on getting through planning.
“The big ones there would be Blackpool and Douglas in Cork and Ennis, Co Clare. We also hope to start work in Sandymount in Dublin. So there is quite a lot of work under way. There are major schemes throughout Enniscorthy and Arklow.
“We build our schemes to a standard of protection against the one-in-100-years flood event for river flooding and one in 200 years for tidal flooding.”
