Car Insurance Premiums Skyrocket: 60% Increase in Four Years

Car insurance premiums have surged by almost 60 per cent in just four years, far outpacing inflation, with customers facing another 10 per cent increase this year. A comprehensive car insurance policy for a station wagon, for instance, has jumped from $703 in 2023 to $1,110, representing a 57 per cent hike despite the owner having a "platinum" safe driver rating.

Rising Premiums and Lack of Transparency

The significant increase in premiums follows a report by the Australian Securities and Investments Commission (ASIC) 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. The report also found that insurers were not detailing how their premiums were being calculated, with 73 per cent 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."

Reasons Behind the Increases

An Insurance Council of Australia spokesperson attributed the premium increases to the rising cost of paying claims, which had increased "sharply". The spokesperson said the average motor claim had risen 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. "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.

Government Response and Industry Reaction

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. However, the Motor Trades Association of Australia reported that 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.

An ASIC spokesperson said "misleading pricing practices that affected the cost of living for Australians were an ASIC enforcement priority" this year. The spokesperson said ASIC's 2026 review found that car insurance premiums had increased significantly and most consumers were being given only vague or incomplete information about why.

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". The spokesperson 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.