Car Insurance Premiums Surge Faster Than Inflation in Australia Amid Transparency Concerns

Car insurance premiums are escalating at a pace far exceeding general inflation, placing a substantial financial burden on Australian drivers.

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Most insurers gave only generic explanations in supplementary documents, with some providing no explanations at all.

In the 12 months leading up to July 2025, car insurance premiums rose by 8 percent. This increase is more than double the 3 percent rise in the broader consumer price index, intensifying pressure on household budgets even as overall inflation has begun to ease. Many drivers are reportedly paying hundreds of dollars more without clear explanations for the sharp jump.

An Australian Securities and Investments Commission (ASIC) report released on Tuesday found that insurers provided insufficient transparency regarding the factors driving these cost increases. Most insurers offered only generic explanations in supplementary documents, with some offering none at all. "This fails to meet the needs of customers trying to understand the reasons for significant price increases," stated ASIC commissioner Alan Kirkland.

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This fails to meet the needs of customers trying to understand the reasons for significant price increases.

ASIC's review of eight major insurance brands, which collectively hold 72 percent of the market, revealed that none adequately explained the key factors behind premium calculations or year-on-year changes. Kirkland emphasized that this lack of information hinders customers' ability to assess whether to remain with their current insurer or seek better deals elsewhere. The report also noted poor disclosure regarding higher costs for installment payments compared to annual ones.

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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.

The Insurance Council of Australia acknowledged the need for better customer understanding, citing escalating extreme weather costs, insurance-linked taxes, and rising repair and vehicle parts expenses. Motor claims costs alone have surged 47 percent since 2020. The council encouraged customers to engage with their insurers and shop around. A significant factor contributing to increased vehicle insurance claims costs is a surge in car thefts in Victoria, which accounted for more than all other states combined in 2025.

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