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Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding crisis in Ireland - Leaving Cert Economics - Question 8 - 2016
Question 8
Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding cris... show full transcript
Worked Solution & Example Answer:Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding crisis in Ireland - Leaving Cert Economics - Question 8 - 2016
Step 1
Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding crisis in Ireland. (i)
Answer
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Increase in Cost for Householders: With the introduction of a levy on home insurance premiums, households may face increased insurance costs. This could lead to reduced disposable income for families, affecting their overall standard of living.
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Decline in Insurance Renewals: As insurance premiums rise, some households might opt not to renew their insurance policies. This reduction in coverage could expose these households to financial risks in the event of future flooding or other damages, ultimately leading to adverse economic consequences.
Step 2
Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding crisis in Ireland. (ii)
Answer
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Impact on Local Businesses: Higher insurance costs can lead to increased operational costs for local businesses, particularly those that rely on flooding-prone areas. These businesses may face challenges in sustaining profitability, potentially leading to job losses.
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Increased Government Revenue: The levy might boost the government’s revenue, which could be redirected toward flood management and infrastructure improvements, potentially benefiting citizens in the long run.
Step 3
Suggest one alternative method for addressing the flooding crisis in Ireland.
Answer
One alternative method is to invest in improved flood defense infrastructure, such as the construction of barriers and enhanced drainage systems. This involves:
- Assessing vulnerable areas to determine where intervention is necessary.
- Implementing a comprehensive plan that includes regular maintenance of existing drainage systems and flood barriers.
- Engaging local communities to develop sustainable practices that can mitigate the impact of flooding over the long term.