The Queensland Government has slammed a proposal by Australia's leading general insurance company to introduce a levy for people living in low lying coastal areas.

The Insurance Australia Group (IAG) is proposing coastal landowners pay a 2 per cent levy on the value of their land for 50 years to provide compensation if rising sea levels render the land unusable.

The company has made the recommendation to the Federal Government's Standing Committee on Climate Change, but Queensland Natural Resources Minister Craig Wallace says the proposal is unfair.

"I don't think that is a fair cop-out from the insurance industry to be bumping up those prices," he said.

"Many local communities design their houses with that particular fact in mind.

"I don't think it is good enough for insurance companies to penalise people who built in coastal areas of Queensland."

IAG's chief risk officer Tony Coleman says the compensation fund could be managed by the Federal Government and is designed to offer landowners improved protection from climate change.

"So if you're unfortunate enough to be the owner of a waterfront property and sea levels rise to the point where that property simply can't be occupied any more, there is no insurance policy sold at the moment that will pay you back the value of the land," he said.

"So you will lose the value of the land if you own that property."  Source