A taskforce has called on the Federal Government to expand coverage by the Australian Reinsurance Pool Corporation (ARPC) to cover insurance market failures in areas such as north Queensland.

The taskforce, headed by Cairns State MP Gavin King, has issued a 10-point plan to tackle massive rises in residential strata title insurance premiums in north Queensland.

It says the ARPC could provide reinsurance for “residential strata title schemes and other segments of the insurance market facing acute pricing issues”.

“The Commonwealth Government should consider standing in the market to provide reinsurance at a fair price to insurers, to help put downward pressure on reinsurance costs.”

Mr King says the ARPC fund – which was set up 10 years ago to enable Australian insurers to reinsure their terrorism risk exposures – is well capitalised and provides dividends to the Australian Government. The previous government used the fund to extend dam walls in Sydney and Brisbane.

Queensland Premier Campbell Newman and federal Assistant Treasurer Arthur Sinodinos met Mr King last week. He says they agreed to formulate a joint state-federal action plan in the next few weeks.

Senator Sinodinis’ office did not respond to calls.

The Insurance Council of Australia told insuranceNEWS.com.au the 10-point plan is a positive initiative that builds on dialogue between itself and the state and federal governments.

It says the reinsurance pool proposal is a matter for the Federal Government.

The taskforce also calls on the Productivity Commission to review risk assessment methodologies used by insurers. But an ICA spokesman says that would be “problematic”, as insurers price risk according to their own criteria.

He says the nature of insurance products has changed over the past two years, with the widespread rollout of flood cover to residential policies and the extra risk insurers are now pricing.