12:00a.m. 11th July 2008

A proposal to slug property owners with a levy to insure their land against the impact of rising sea levels could cost some up to $20,000 a year, Sunshine Coast mayor Bob Abbot says.

Mr Abbot said yesterday he could not support such a plan because of the cost.

The concept was put forward in a submission from the Insurance Australia Group to the House of Representatives standing committee on climate change.

IAG chief risk officer and group actuary Tony Coleman said property owners could now insure their homes, but there was no insurance cover for the value of their land.

“This is an insurance gap we’ve identified,” he said.

“So we have suggested in our submission how government and the private sector could potentially develop an insurance product to help protect coastal land owners.”

IAG’s submission suggested property owners pay a regular levy, based on a percentage of their land value, into a fund for a fixed term.

From that fund, the landholder would be compensated if the land became usable.

It used the example of an annual charge of 2% over a period of 50 years.

“Such a scheme could be operated by government alone or in conjunction with the private sector,” the submission said.

“Should the land become unusable, landowners would receive the entire land value in compensation and title to the land would revert to the government.”

However, Mr Abbot said the insurance group’s proposal was unreasonable and unfair.

“I understand there needs to be some protection mechanism for those people but 2% a year for 50 years?” he said.

“That would be $10,000 to $20,000 a year for some people.

“And there are already a lot of people who have bought waterfront blocks who have spent money to ensure their property is not at risk.

“Those people have already paid for that protection and it would be unfair to hit them again.”

IAG estimated the value of property at risk in Australia ranged from $50 billion to $150 billion.

Mr Abbot said he would prefer to see the insurance industry develop a product that property owners could choose to purchase.

The Real Estate Institute of Queensland spokesman said it supported the levy proposal.

He said it made sense to being planning for the impacts of climate change now.

“Another submission from the insurance industry has called for a national policy of reform to address the potential impacts of climate change on coastal communities.

These would include changes to planning and development regimes as well as national “coastal defence”.

The Insurance Council of Australia’s 2006 estimates found that 425,000 Australian addresses were below four metres above mean sea level and within three kilometres of the current shoreline.