TWO separate months of violent weather conditions cost insurance companies €152m – three quarters of what the government plans to spend on flood defences over the next five years.

The figure also compares with a total of €176m spent on flood-related claims by insurance companies between 2000 and 2004, illustrating a massive increase in weather-related damage in recent years.

The statistics have sparked criticisms of the government's response to flooding and calls by the insurance industry for investment in future prevention.

Defending high-premium costs and the inevitability that more businesses will not be able to secure cover in the wake of recent flooding, the Irish Insurance Federation (IIF) said development on flood plains must come to an end.

Michael Horan, manager of non-life insurance at the IIF said payouts cost the sector €56m following storms last January. This was on top of €96m in flood claims the previous August, bringing the total for insurance companies to €152m.

He criticised the Office of Public Works (OPW) – the body responsible for expenditure on flooding – for its perceived lack of spending this year.

Noting a national budget of €43m for 2009, Horan said in Kilkenny alone €48m was spent recently on flood defences.

The OPW said it anticipates a spend of €38m for flood relief in 2009 and "has profiled expenditure in excess of €200m between now and 2014", a sum labelled as inadequate.

The IIF said without substantial investment in defences and a reverse in local authority policy which allows development on flood plains, the number of businesses that will be unable to secure funding will increase.

"Premiums are dictated by the cost of claims. Companies allow for a certain amount of weather when they give premiums but this [recent flooding] has exceeded all ex­pectations," said Horan.

"If flood defences are not put in and if the government continues to allow development in these areas then there will be a significant increase in the number of people unable to get insurance."

Mark Fielding, chief executive of the Irish Small and Medium Enterprises association (Isme) hit out at the insurance industry, saying it needed no excuse to hike premiums. He also criticised the government for failing to invest in flood prevention.

"The government certainly need to get their fingers out on this one because insurance companies rarely need an excuse to up premiums," he said, adding that businesses have experienced a general in­crease of 19% in insurance rates in 2009.

"This [flooding] may be the death knell for many businesses. First of all they will not be open for Christmas so they will lose the best part of their trade and for the ones that are lucky enough to survive, their premiums may go up or they may not be able to get insured."