Central Bank publishes Flood Protection Gap Report

The Central Bank of Ireland has today (Monday 14 October) published its Flood Protection Gap Report (PDF 1.13MB).

Some homes and businesses in Ireland are unable to obtain flood cover. This means that when a flood occurs, there can be a shortfall between the actual cost of the flood and the portion of that cost that is covered by insurance.  This is the flood protection gap.

The occurrence of severe flooding could and does leave households and business with high levels of uninsured losses, and may create demands on government to provide financial support.  There is also potential for risk to be transmitted to other parts of the financial system, for example by affecting the availability of credit.

In light of these important economic and societal issues, the potential financial stability impact and in the best interests of consumers, the Central Bank undertook research into the nature and scale of the flood protection gap in Ireland, taking into consideration both the picture today and how that picture might change in future. In our analysis, we identified how many homes and businesses in Ireland are unlikely to obtain flood cover. The analysis does not account for a person’s choice not to purchase insurance, which can also contribute to the flood protection gap.

The key findings of the report include:

• Approximately 1 in 20 buildings have difficulty accessing flood insurance today.
• The estimated average annual cost of inland (river and surface water) flooding is €101m. Severe losses can be much higher than this, with a €510m loss expected about once every 25 years.
• Ireland is likely to see significantly more rainfall in the future due to climate change, increasing the likelihood of flood events and potentially widening the gap.
  

The report was produced following engagement with key stakeholders, including members of the insurance industry and officials from the Department of Finance and the Office of Public Works.

Deputy Governor Sharon Donnery said: “Lack of access to insurance can and does affect Irish communities and businesses in a very real way, as we have seen again recently.  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.

“We hope that this analysis helps to inform the debate on the flood protection gap in Ireland, and recognise that addressing this issue requires work from a broad range of stakeholders. We look forward to further engagement with stakeholders over the coming months on this important topic and we will continue to play our part in identifying and managing the risks arising from the consequences of climate change.”

ENDS

Notes to the Editor 

Read more on the Flood Protection Gap Report here: https://www.centralbank.ie/regulation/industry-market-sectors/insurance-reinsurance/flood-protection-gap-report