Suncorp Personal Insurance CEO Mark Milliner has warned that moves to make flood cover compulsory would drive up home insurance premiums by a “significant amount” for homeowners outside flood-prone areas.

He says the cost of flood cover for those in flood-prone areas would be significant, “not just one or three times more, it would be a lot more”.

“If you’re not careful you will have most Australians subsidising those who live on rivers,” he told The Australian newspaper.

He says only 5% of the population lives in flood-risk areas. “The reality is that if a house sits on an area likely to flood, then the cost of insurance would be significantly higher than a place that doesn’t flood.”

Mr Milliner dismissed both of the Natural Disaster Insurance Review’s proposals for action: to either make flood cover compulsory in all home insurance policies, or to force all insurers to offer flood cover but allow policyholders to opt out of buying it.

He says insurers already provide sufficient cover in flood-prone areas, and that both those proposals fail to take into account the “functioning insurance industry”.

The Government should focus on mapping and mitigation, rather than an “insurance solution” to the problem, he said.

“The system isn’t broken. There is a functioning insurance industry that can respond pretty well to what has occurred in Queensland,” he said. “Let the market work its magic in terms of offering a product.”