One in 20 buildings across the country faces difficulties in obtaining flood insurance, while the costs to the State from severe floods are likely to climb significantly in future decades, the Central Bank has warned.
Ireland’s flood protection gap — the shortfall between the cost of flooding and what is covered by insurance — is also set to widen, it said, with just five counties accounting for over half of that gap risk, a major analysis of the issue has found.
“As with many other aspects of climate change, it cannot be assumed that current approaches to flood risk management will remain viable. There is a serious risk of complacency that must be avoided,” the Central Bank said.
It has now urged various stakeholders, including the Office of Public Works (OPW) and the insurance industry, to work together to better manage the risks arising from the consequences of climate change.
The details are contained in the Central Bank’s Flood Protection Gap Report, which it hopes will be used to better inform a “solutions-focused debate” on the issue.
As global temperatures rise, Ireland can expect drier summers and wetter winters, with extreme storms and floods expected to become more frequent.
Winter rainfall could increase by up to 34% in an extreme climate change scenario, with some models showing an extreme weather event costing €2.5bn becoming twice as likely by 2050.
The bank said while Ireland has broadly managed flood risk to date, we cannot assume that current approaches will remain viable given the various climate change predictions.
Central Bank governor Gabriel Makhlouf said:
The report found that if all buildings in Ireland sought flood cover today, about one in 20 would either be refused or will have fewer insurers willing to provide cover, leading to higher premiums or excesses.
It found that the estimated average cost of inland flooding in Ireland is about €101m annually, with about 89% of that cost associated with the higher flood risk buildings which have limited or no access to insurance.
But it said severe losses can be much higher than this, with a €510m loss expected about once every 25 years. And it stressed that coastal flooding is excluded from these estimates and could increase the cost significantly.
The analysis found that 54% of the flood protection gap is concentrated in just five counties — Dublin, Cork, Kildare, Clare, and Louth — because of where floods occur but also the location of more densely-populated areas.
This means that in some counties, whole villages or towns may be unable to obtain flood insurance while in other areas it is freely available, the report said.
It warns high levels of uninsured losses may create demands on government to provide financial support, with potential for risk to be transmitted to other parts of the financial system, for example by affecting the availability of credit.
The analysis also found that that demountable flood defences, often disregarded by the insurance industry, do make a material difference to the cost of flood damage in areas where they are used
Almost 68,732 buildings in Ireland are protected by defences — about 5,000 by fixed OPW defences, with the others afforded some level of protection from other forms of defences, including OPW demountable defences.
