The Federal Opposition will investigate whether the Australian Reinsurance Pool Corporation could be used to reduce the cost of insurance in north Queensland.

Shadow Assistant Treasurer Mathias Cormann will develop a policy response to the increasing cost of insurance in the region, after Coalition MPs alleged insurers have been price gouging.

Nationals MP George Christensen and Liberal MP Warren Entsch say the reinsurance pool was established to address insurance market failure for terrorism cover, and the market has failed in north Queensland because cover is unaffordable and in some cases unavailable.

Mr Christensen, whose Dawson electorate covers the coast from Mackay to Townsville, says a premium on a two-bedroom Mackay house has risen from $2642 to $13,616, while the price for a unit in Bowen has jumped from $13,569 to $48,000 in a year.

He says owners in one block of units received 13 rejections for cover.

Mr Christensen and Mr Entsch, whose Leichhardt electorate covers Cairns and Cape York Peninsula, have rejected the report from the Australian Government Actuary, which investigated strata title premium rises and found insurers had historically underpriced risk and the business was unprofitable over the 2007-2012 period.

They say the insurance crisis extends beyond strata to other residential and businesses.

The actuary used data from three insurers providing strata cover in the region – CGU, Vero and Zurich.

Mr Christensen says the actuary used data from a small selection of insurers over a short period that included the 2008 storms in Mackay and last year’s Cyclone Yasi, the worst cyclone to hit Queensland in almost a century.

He says the report found no evidence of price gouging “because the report did not look”.

Mr Entsch says the Coalition will investigate mechanisms “that are going to be effective in making it financially competitive for insurance companies to offer policies in our region and price these policies in a way that accurately reflects the risk”.

He says if insurers have been underpricing for many years, it is ridiculous for them to try to recoup the losses in two or three years.

“I, for one, don’t want to see the fallout from a major cyclone coming through when people have $20,000 to $50,000 cyclone excesses or, worse, no insurance at all.”

The Insurance Council of Australia says there is competition in the north Queensland market and current conditions are more likely to attract new entrants than at any time during the past few years.

It says insurers are readjusting prices on strata cover to reflect the underlying technical risks, following years of underpricing and rising reinsurance costs.

Last year’s natural disaster inquiries heard proposals for several types of pool to make flood cover available to high-risk properties.