IAG has released further detail on a proposed coastal insurance scheme to better protect almost 500,000 Australian coastal properties located within four metres of the high-tide level.

Chief Risk Officer Tony Coleman told an investor forum that land erosion and inundation pose a great risk to owners of low-lying property because property insurance does not cover land value.

“Consider the financial risk to banks and owners if land becomes unusable,” he said.

Preliminary estimates put the value of vulnerable land in Australia at $50 billion-$150 billion.

IAG advocates an insurance fund operated and funded either by the Federal Government alone or via a public-private partnership.

The insurer initially floated the idea in a submission to the Garnaut Climate Change Review in March.

Mr Coleman says that under a public-private proposal, coastal residents could pay an annual premium of 2% of the land value, covering a fixed term of 50 years. Insurers would fully compensate owners should land become unusable within that time.

In return, the Government would take over the property title and fund annual premium payments for the remainder of the policy term, effectively acting as reinsurer.

A 2007 Intergovernmental Panel on Climate Change report predicted a minimum rise in global sea levels of between 18cm and 59cm by 2100.