The Federal Government is pursuing options for an insurance aggregator for northern Queensland in a Treasury discussion paper addressing the cost of home and strata title cover in the region.

It also wants submissions on how to promote resilience of strata buildings by facilitating engineering assessments, and on how the market can be expanded by relaxing the rules for foreign insurers to encourage them into the market.

The paper was released late on Friday and submissions close on June 2.

Finance Minister Mathias Cormann says homeowners in north Queensland are paying about two-and-a-half times more for cover than those in the state’s south.

The Government wants to work with the insurance sector and wants comments on the regulatory impacts of any proposed policy measures, including costs.

“Regulation is not the default position for this government and will only be imposed where unavoidable,” Senator Cormann said.

“Appropriate regulation that complements industry but fills any gaps in private sector efficiency may sometimes be necessary, after the costs and benefits of any such regulation are assessed.”

Insurers have rejected building a comparison site, saying insurance is about more than just price and pointing to the UK regulator’s concern that consumers using an aggregator may not get the best cover for their needs.

The Treasury paper says rising claims, reassessment of risk by insurers and reinsurers, higher sums insured and making flood cover standard have all contributed to the higher cost of cover.

“However, in order to be sure that the additional price paid for insurance by north Queenslanders does not exceed that justified by the underlying risks, it is necessary that there be a healthy level of competition in the local insurance markets.”

It says relaxing the requirements on unauthorised foreign insurers (UFIs) might encourage more of them into the market, but could also give them a competitive advantage over local insurers.

Consumer protection measures that apply to local insurers do not apply to UFIs, who usually cover large and unusual risks.

The paper asks whether home and strata insurance has become unaffordable and what impact that is having on the north Queensland economy.