The Motor Accident Insurance Commission has reviewed the CTP scheme, which is available to compensate people injured in motor vehicle accidents, for the first time in seven years.
The report found Queensland's 4.68 million CTP customers are all paying $366 per vehicle each year and low profits could lead to the withdrawal of one of the four insurers: Suncorp, Allianz, QBE or RACQ.
The regulator has called for submissions on its discussion paper on potential reforms, including leaving the scheme as it is, making various changes or moving to a publicly-underwritten CTP model.
Treasurer Cameron Dick says the review is needed to ensure Queensland continues to have the "most affordable CTP scheme in Australia".
"CTP is clearly delivering for Queensland drivers but for its long-term health, we need to make sure it is sustainable for insurers as well," he said on Monday.
"We're looking to hear from any industry participants or other stakeholders with ideas about how things can be done better."
The regulator looked at a NSW-style premium equalisation mechanism, where premiums could be allocated from insurers with better-performing portfolios to those with poor-quality risks.
That could reduce the risk of an insurer not having a big enough premium pool to pay claims, but it could also lead to insurers having less incentive to perform or trying to game the system.
That change would also need extensive analysis and design, potentially leading to actuarial and administrative costs, which "may need to be passed on to motorists".
Another option would the South Australian model, where CTP policies are randomly allocated to insurers rather than being chosen by motorists.
Either all four insurers could get a quarter of new policies, an insurer would get a proportion of new policies equal to their market share or the insurer with the lowest premiums could get the largest share of new policies.
Queensland could also allow general insurers to hold more than one CTP licence, the report said, which is allowed in NSW and the ACT.
The other option is moving to a CTP scheme underwritten by taxpayers, such as those in Victoria, Tasmania, Western Australia and the Northern Territory.
The regulator suggested existing CTP insurers would lose sales and profits, but that could be offset by the state government outsourcing claims management services to them.
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