Car insurance premiums jump by almost 60 per cent in four years

In short:

Comprehensive car insurance premiums have jumped another 10 per cent after similar hikes last year.

It follows an ASIC review that called for more transparency behind insurer calculations.

What's next:

The federal government has called on insurers to step up with fairer pricing and greater transparency.

Car insurance premiums continue to increase well beyond inflation as customers who have already endured exponential hikes since 2020 are slugged with another 10pc.

Comprehensive car insurance for this journalist's station wagon, for example, has just gone up 10 per cent (after a similar increase last year), representing a 57pc hike since 2023 when it cost $703.

Recently billed $1,110 to insure it for another year, the same car under the same conditions cost just $566 in 2020 — an astonishing 96 per cent increase since the start of the decade that would have been higher without a change of insurer.

It follows an ASIC report released in August that found premiums had surged by more than 42 per cent from 2019 to 2024, and a further 8 per cent in the 12 months to July 2025.

It also found insurers were not detailing how their premiums were being calculated, and 73 per cent were only giving generic reasons for rate increases.

Federal Assistant Treasurer and Minister for Financial Services Daniel Mulino said the government had committed $2.4 million to reforms to improve insurer transparency.

"While this work is targeted at home and contents insurance at this stage, the government is considering the issue of premium transparency in the motor insurance market,"he said.

"I have also called on the industry to step up with fairer pricing, greater transparency, and better value for Australians."

Higher repair costs blamed

An Insurance Council of Australia spokesperson blamed the insurance premiums on the cost of paying claims, which had risen "sharply".

She said the average motor claim had increased 32 per cent to $6,266 over the four years to 2026 due to higher vehicle replacement, parts and labour costs, and longer repair times.

She said this was "caused by national parts and skills shortages, and the specialised equipment and expertise modern vehicles require".

"The most effective way to ease pressure on premiums is to tackle the costs driving them,"the spokesperson said.

"The Insurance Council has called on governments to regulate the credit hire industry, address repair workforce shortages and require manufacturers to make spare parts available in Australia."

The government said it was strengthening skills and training for Australians, having legislated to make its Free TAFE program permanent and deliver at least 100,000 fee-free places annually from 2027.

Free TAFE enrolments have already surpassed 850,000 people since the program was launched in 2023.

But the Motor Trades Association of Australia last month said the vacancy fill rate for automotive workers was just 48 per cent, and average applicant numbers per job had fallen from 8.2 in 2024 to just three in 2026.

It estimated there was a 38,000-person shortfall in automotive trade professionals and technicians.

It called for automotive trades to be recognised alongside other "priority occupations" in the wake of Federal Home Affairs Minister Tony Burke's skilled migration changes announced last month.

'Misleading pricing practices'

An ASIC spokesperson said "misleading pricing practices that affected the cost of living for Australians were an ASIC enforcement priority" this year.

It said its 2026 review found that car insurance premiums had increased significantly and most consumers were being given only vague or incomplete information about why.

"ASIC's aim through the review was to achieve compliance outcomes across the motor insurance industry by lifting the standard of disclosures and information provided to consumers," the spokesperson said.

The ASIC review called on insurers to explain the key factors behind their premiums, why they had changed, and how factors like excess and payment methods affected price.

"ASIC will continue to monitor industry practices and consider further regulatory action where appropriate,"the ASIC spokesperson said.

Using 'up-to-date' information

An AAMI spokesperson said premiums were recalculated each year using the most "up-to-date information available at the time of renewal, rather than using or carrying forward the previous year's premium".

Loading..."Even if nothing has changed on your end, your premium can increase because of changes in the cost and frequency of claims across similar policies, updated assessments of risk in comparable locations and broader cost pressures such as repair and replacement expenses," she said.

She advised people to check what value their car was insured for, ensure the kilometres selected reflected how many kilometres they drove yearly, consider increasing the excess to pay more if there was an accident, and to remove anyone listed on the policy if they were not driving.

The ABC reported in 2024 that while premiums may reflect the rising cost of repairs, profitability in the Australian car insurance market still rose by $1 billion the previous year.

Insurers increased profitability through long-term customers who did not shop around when they received increased bills, nor try to have their premiums discounted or reduced before accepting them.