Allianz has warned against “unrealistic expectations” after the Queensland Government pledged $50 million for flood mitigation work.

Projects announced in the past week include $1.8 million for drainage upgrades in Toowoomba and almost $1 million for levee and drainage systems in Laidley.

More than $5.2 million will be spent on major projects in Gympie, $2.4 million will go towards two levees in Bundaberg and a $500,000 grant will aid construction of a levee and detention basin in Cairns.

Allianz GM Corporate Affairs Nicholas Scofield says any investment in flood mitigation is positive, but the sums involved are “very modest” when compared with the enormity of the problem.

There are “potentially unrealistic expectations” in terms of premiums, and benefits will require time to flow through, due to the sophistication of pricing techniques.

“Just because a levee is built does not mean premiums will just return to normal everywhere in that town,” he told insuranceNEWS.com.au.

“Revised flood mapping needs to be carried out and incorporated into the Insurance Council of Australia’s National Flood Information Database.

“There is no question that if the risk is reduced, the premiums will be reduced. Insurers have no incentive to keep prices higher than justified.”

State Community Recovery and Resilience Minister David Crisafulli says he is not afraid to “hold insurers to account”.

“Insurers have told us that a rise in vulnerability results in a rise in premiums,” he told insuranceNEWS.com.au. “With the security these levees bring, we hope to see the reverse.

“They will be informed, they will be monitored and they will be held to account.”

Mr Crisafulli says the funding could be “the start of something very special. Local governments are rolling up their sleeves to contribute and we’ll be working with the next federal government too.”

RACQ Insurance says it welcomes the funding and will monitor progress, while constantly reviewing premiums to ensure they reflect risk.

It also maintains its support for the Natural Disaster Insurance Review recommendation for a pool to subsidise policyholders in high-risk zones – an idea rejected by the Government earlier this year.

“Immediate assistance with the affordability of insurance to householders in high-risk flood areas would be provided, which could be progressively wound back as local flood mitigation works are rolled out,” a spokesman said.