The Government is opposing a bill that would have compelled insurance companies to cover homeowners in flood prone areas where the OPW has carried out flood relief schemes as it says it risked undermining the home insurance sector.
Fianna Fáil's Michael McGrath presented the legislation in the Dáil and said while the roll-out of flood schemes has been slow, but have proven to be successful when completed.
Mr McGrath said his Private Member's bill requires insurance companies to offer cover to homeowners once relief works have been carried out.
"It is not acceptable for insurance companies to continue to deny cover to people where a scheme is complete," he said.
Mr McGrath said the industry claims 98% have flood cover, but CSO data suggested a third of households did not have cover.
Minister of State Eoghan Murphy said insurance companies had paid out in the region of €1.5bn for flood and storm events and the proposed bill threatened to undermine this.
Mr Murphy said the bill could also be in contravention of European Union rules and the Constitution as it did not provide for access to the courts.
He said the bill could result in higher premiums and could see international companies withdrawing from the Irish home insurance market.
Mr Murphy said the bill could also create an additional financial risk for the State as companies could seek compensation for losses if they were compelled to cover certain properties.
Mr McGrath told the Dáil that there was "a ridiculous stand off" now between the Government and the industry over the issue of de-mountable defences, which he said were used across Europe.
He said the €85m scheme in Cork remained unresolved and he criticised the Government for not accepting the bill, and said it should be allowed to proceed to committee stage.