Australian car insurance premiums extend sharp rise as transparency pressure builds

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Australian car insurance premium rise

Highlights

Australian comprehensive car insurance premiums rose over 42 per cent from 2019 to 2024, with some individual policies nearly doubling since 2020.
ASIC found 73 per cent of insurers provided only generic premium hike explanations, spurring a $2.4 million government reform for greater transparency across the sector.
Average motor claim costs increased 32 per cent to $6,266 over four years to 2026, driven by parts shortages, higher repair costs, and a 38,000-worker sector shortfall.

Premium increases and regulatory scrutiny

As reported by ABC News, comprehensive car insurance premiums in Australia are continuing to rise, with some policies increasing by nearly 60 per cent over four years and, in one example cited, almost doubling since 2020.

An ASIC report released in August found premiums rose more than 42 per cent from 2019 to 2024, followed by another 8 per cent in the 12 months to July 2025. The review also found insurers were often not clearly explaining how premiums were calculated, with 73 per cent giving only generic reasons for price increases.

Federal Assistant Treasurer and Minister for Financial Services Daniel Mulino says the government has committed $2.4 million to reforms aimed at improving insurer transparency. While the current work is focused on home and contents insurance, he says the government is also considering premium transparency in the motor insurance market and has called on insurers to provide fairer pricing, greater transparency and better value.

Claims costs and labour shortages weigh on the sector

The Insurance Council of Australia says higher premiums reflect the rising cost of claims. According to an industry spokesperson, the average motor claim has increased 32 per cent to $6,266 over the four years to 2026, driven by higher vehicle replacement, parts and labour costs, as well as longer repair times.

The council says national parts and skills shortages, along with the specialised equipment needed for modern vehicles, are adding to repair bills. It is urging governments to regulate the credit hire industry, tackle repair workforce shortages and require manufacturers to make spare parts available in Australia.

The government says it is strengthening skills and training through its permanent Free TAFE program, with at least 100,000 fee-free places to be delivered annually from 2027. Even so, the Motor Trades Association of Australia says the vacancy fill rate for automotive workers is only 48 per cent and the sector faces an estimated shortfall of 38,000 automotive trade professionals and technicians.

ASIC says misleading pricing practices affecting the cost of living are an enforcement priority this year and that it is seeking stronger compliance across the motor insurance sector through better disclosures. Insurers including AAMI say premiums are recalculated annually using updated claims, risk and cost data, although earlier reporting indicated profitability in the Australian car insurance market also increased as many long-term customers did not switch providers.

Our earlier report on Hyundai’s U.S. recall of 94,622 older Hyundai and Genesis vehicles outlined a fire risk linked to overheating front power seat motors, prompting owners to park outdoors until a fix is available. We noted that the remedy was still being developed, highlighting how safety defects can trigger regulatory scrutiny and add operational and repair costs for automakers and service networks.

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