Scottish householders are paying for property development in the southeast of England by contributing to a £200 million-a-year "stealth subsidy" for insuring buildings in areas at high risk of flooding.

To keep insurance costs down for thousands of homeowners on English flood plains, owners in Scotland are being charged higher premiums, according to a leading flood insurance expert, David Crichton. And the costs for some are likely to rocket next year, he warns.

As many as 23% of homes in England are at risk of flooding, compared to under five per cent in Scotland. Because of pressures on space, more than one in 10 new properties in England are still being built in flood-risk areas – something that hasn't happened in Scotland and Wales for years.

But because the insurance industry has promised that it will provide affordable flood insurance for every UK home and small business, those in low-risk parts of Scotland are being made to pay more to subsidise those in high-risk areas. This is a "stealth subsidy" which is unfair to Scotland, Crichton told the Sunday Herald.

"At present there is a subsidy of over £200m per-year from policyholders in low-risk areas to those in high-risk areas to enable continued flood plain development in the southeast of England," he said. "Scots with their lower flood risk are paying a disproportionate share of this."

Crichton argued that England's efforts to manage flood risks better had been "largely unsuccessful". There were now at least 40 ways in which Scotland's flood risk was lower than the rest of the UK.

"Scotland has gone a long way to manage the risk," he said. "The trouble is that most insurers are unaware that there is any difference at all."

He urged Scottish ministers to approach the insurance industry to explain the differences in flood policy north of the Border. "Ministers could also demand that the insurance industry no longer force Scots to subsidise London property developers," he said.

The situation was already becoming "unsustainable", he argued. "A few of the cleverer insurers have realised that they can easily undercut the premiums in low-risk areas such as Scotland."

Crichton used to work for the former General Accident insurance company, and is now an Honorary Research Fellow at the University of Dundee and an Honorary Visiting Professor at University College London. He lives in Inchture on the Firth of Tay, and has advised most Scottish local authorities on flood insurance.

In a study published in the latest edition of the Town and Country Planning Association journal, he pointed out that the 51-year-old agreement between insurers and the UK Government to guarantee flood insurance for all was due to end next year. It was likely to be replaced by a new "hard-line" policy by insurance companies, he predicted.

"Right now, insurers are working out their strategies for withdrawing from flood risk areas," he said. "In the next 12 months, people in Scotland who live in flood risk areas will be shocked by the premium increases for their household or business insurance."

Scots in high-risk areas could expect insurance costs to rise as much as 70%, he warned. This is similar to the price hikes imposed on residents of Morpeth, Northumberland, since it was flooded in 2008.

As well as higher premiums, insurance companies are likely to demand much higher excesses – the initial amount that has to be met by householders before they can claim money from insurers. One in five of householders surveyed in Morpeth now had excesses of £4000 or more for flooding.

There is a clear danger that some properties at high risk of flooding could become impossible to insure, particularly if rainfall and storms increase as climate experts say they will. Average rainfall in the west of Scotland rose by 50% between 1961 and 2004, and last year was the wettest on record (see box, right).

"There are plenty of properties at risk of flooding in Scotland and those risks are increasing," said Dr Richard Dixon, director of WWF Scotland. "Although we have become much better at stopping people building in really stupid places, climate change means that more existing properties will start to be at risk from flooding."

The big floods that used to happen every 100 years would start coming every 20 years or even every decade, he warned. "Combine increasing risk with the insurance industry withdrawing cover in some areas from next year, and you have a real crisis as homes and businesses become uninsurable."

Dixon agreed with Crichton's analysis of the insurance stealth subsidy. "At the moment people in Scotland are paying more because they are effectively subsidising the higher risks in England," he said.

The Scottish Government wouldn't be drawn on the subsidy, however. Flood insurance is Westminster's responsibility, a spokeswoman pointed out. "The Scottish Government is committed to working with the Association of British Insurers and the UK Government to ensure flood insurance remains widely available and affordable."

Last week, the Scottish Government, along with the Scottish Environment Protection Agency (Sepa), announced the latest phase of their national programme of flood risk assessments. It showed that there are now 243 areas of Scotland that are "potentially vulnerable" to flooding.

These cover a huge swathe of the central belt, large areas in the south and north and substantial chunks of the islands, often close to rivers or the sea (see map on previous page).

Altogether there are over 125,000 properties at risk of flooding in Scotland, including one in every 22 homes and one in every 13 businesses.

The greatest numbers of properties at risk are around the firths of the Clyde and Forth, and Loch Lomond. But the highest proportions of properties at risk are in Findhorn, Nairn and Speyside, and around the Tay and the Tweed.

According to Sepa, there are also a high proportion of care, education and emergency services on Scotland's flood plains. One in 10 fire stations are at risk of flooding, as are five per cent of hospitals and health centres, five per cent of residential care homes and four per cent of schools.

The price for householders and businesses for coping with the 17 major floods that Scotland has suffered in the last two decades has been immense. The average cost of damages to homes, businesses and agriculture from all sources of flooding is estimated to be between £720m and £850m a year.

"We now know the size of the problem we face as a nation," said Professor James Curran, Sepa's new chief executive. "Unchecked, we can expect climate change to increase the frequency and severity of extreme events including flooding."

The causes and consequences of flooding were too complicated for any single organisation to deal with alone, he argued. That's why new guidance for 2012 to 2016 was published last week to ensure joined-up working between responsible bodies during a flood event.

"The arrangements developed by Sepa and government will help define sustainable policies and actions for flood risk management," said Curran.

"Sepa's strategic overview will help all those responsible to set a course for action and decide how we, as a society, manage the risk of flooding in the future."

The new flood risk assessment was described as a "significant milestone" by the Scottish Government. "For the first time, we have a national picture of flood risk across Scotland, which will help target efforts to plan and invest in reducing impacts in areas most vulnerable to flooding," said a Government spokeswoman.