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MELBOURNE, Feb 3 AAP

February 03 2013, 1:46PM

Australia's largest insurer Suncorp says local government should have done far more to protect the flood-prone towns it controversially stopped selling policies to last year.

The group's insurance chief executive, Mark Milliner, responded after Ipswich mayor Paul Pisasale last week accused the industry of refusing to pay out millions of dollars to flood victims while posting growing profits.

Massive floods have wreaked havoc in parts of Queensland in recent days, only two years after the destructive 2011 deluge.

Mr Milliner, who is also president of the Insurance Council of Australia, said Suncorp had lost a lot of money in insurance claims from towns it had stopped selling flood cover policies to, such as Roma and Emerald in outback Queensland.

"In Roma over the last three years from a business perspective we've probably collected about $4 million in premiums and spent about $150 million in claims," he told ABC TV's Inside Business.

"I think from a broad public and private sector we've spent nearly half a billion dollars in fixing up infrastructure, schools as well as homes up there."

A levee could have been built in the town eight years ago for $2 million, he said, but would now cost $15 million.

A levee was now planned for Roma, but in the meantime its average insurance premium had jumped to $3000, compared to nearby Tylerville, which had a $1200 average but also had a flood levy.

Premiums had increased broadly across Queensland and Australia over the past two years by about 10-15 per cent a year, Mr Milliner said.

"One of the solutions is to continue to have better flood mapping, understand the data and make sure we don't build houses in flood plains going forward."

Mr Milliner visited one of the worst-hit towns, Bundaberg, over the weekend.

He said it was too early to tell what the total loss to Suncorp would be from the floods.