Car owners left guessing about insurance premium price hikes

Car owners are being left in the dark about the cause of steep price rises for insurance premiums, the consumer watchdog says.

During the 12 months to July 2025, there was an 8 per cent hike in the cost of motor vehicle insurance premiums – well above inflation – a report today by the Australian Securities and Investments Commission found.

This followed increases of more than 42 per cent between 2019 and 2024.

“Most insurers gave only generic explanations in supplementary documents, with some providing no explanations at all. This fails to meet the needs of customers trying to understand the reasons for significant price increases,” ASIC commissioner Alan Kirkland said.

The research scrutinised eight insurance brands across five insurers, representing about 72 per cent of the market, and included consumer research involving more than 2000 Australians.

But none of the companies reviewed explained the key factors that impacted how premiums were calculated in quote and renewal documents, or why they had changed from the previous year.

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Where insurers charged more for paying in instalments, they did not clearly explain in renewal notices that consumers could save up to 20 per cent by paying annually, the research noted.

While 37 per cent of consumers nominated price as the most vital factor in deciding whether to purchase or renew a policy, they were hampered by unclear information from insurers.

This made it harder for consumers to compare products, question price increases or take steps to reduce premiums.

“Consumers should not have to guess why premiums have changed. If an insurer has increased a premium, consumers should be able to understand what is different,” Kirkland said.

The ASIC study also shows it pays to shop around, even if it was hard making price comparisons.

Many insurance holders who challenged their renewal notice were able to secure a lower price. From the consumers who contacted their insurer before renewing, 31 per cent had their premium reduced without changes to their cover.

“That finding shows it pays to ask, with some consumers who challenged their premium increase ending up with a better deal,” Kirkland said.

“The problem is that not everyone has the time, confidence or capability to negotiate with their insurer, and many may not even know that this is possible. Sadly, these findings indicate that sometimes loyalty is not repaid.”

The Insurance Council of Australia says it welcomed the report and said premiums had been under pressure due to various factors.

“Insurers recognise the need to support customers to understand what they are paying and why, and welcome ASIC’s focus on premium communications,” a spokesperson for the council said.

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“Premiums have been under pressure across the country due to a range of factors including escalating extreme weather costs, insurance-linked taxes, and rising repair and vehicle parts costs, with motor claims costs up 47 per cent since 2020 and building costs up 44 per cent since 2022. 

“This is a highly competitive market, and we encourage every customer to talk to their insurer and shop around at renewal. 

“The industry is exploring options to explain premiums more clearly to customers, and is looking forward to engaging with the government on the premium transparency process announced in the budget.”