The Federal Government should negotiate with state authorities to let the Territory Insurance Office (TIO) extend its coverage across northern Australia, according to a report on the region’s development.

Insurance affordability and availability is a significant barrier to Canberra’s plan to develop northern Australia, the joint parliamentary committee investigating the matter says.

It makes 42 recommendations, with seven priorities, including that the Federal Government take measures to cut premiums to an affordable level, “which could include increasing competition in the insurance market in northern Australia”.

Legislation limits the government-owned TIO to operating in the NT.

“There was a consistent refrain that insurance costs were becoming prohibitive and insurance products less accessible due to the limited number of insurers operating in the north,” the report says.

It finds an “extraordinary disparity” between insurance costs in the north and south of the country and between the NT and north Queensland. It says insurance in the Cocos (Keeling) Islands and Torres Strait Islands is in a “parlous state”.

Insurers told the inquiry premiums reflect risk but the report says “the risk factors applying in the north – chiefly cyclones – do not fully explain this [price] disparity”.

A TIO spokesman told insuranceNEWS.com.au the company could not comment.