'Loyalty doesn't pay': Car insurers asked to explain soaring premiums

Car insurance companies in Australia are facing pressure from the corporate regulator, ASIC, to explain the reasons behind substantial and ongoing premium increases. A recent review found that premiums surged by 8% in the year leading up to July 2025, a rate significantly outpacing inflation and following a more than 42% increase between 2019 and 2024.

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Car insurance was the most complained about insurance product in 2024-25, and the biggest reason that people complained about their car insurance was premiums.

The Australian Securities and Investments Commission (ASIC) initiated the review after a notable rise in consumer complaints, with car insurance being the most frequently complained-about product in 2024-25. ASIC commissioner Alan Kirkland stated that premium costs are a "real source of consumer pain," particularly as many individuals are already contending with cost-of-living challenges. He noted that consumers are "unhappy, they're complaining, and they want to understand more about the reasons for those significant premium increases."

ASIC's investigation into eight insurance brands from five major insurers, which collectively represent nearly three-quarters of the market, revealed that renewal notices often failed to provide clear explanations for premium hikes that exceeded inflation. This lack of transparency leaves consumers uninformed about the specific factors driving their costs up. Kirkland emphasized the importance of clear communication, stating that insurers "tell us there are a range of reasons for these significant increases, but the problem is they're not explaining the reasons for those increases."

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This is a real source of consumer pain, and that's not a surprise given that many people are battling cost-of-living concerns.

Furthermore, the review uncovered that insurers charging higher fees for installment payments (weekly, fortnightly, monthly, or quarterly) did not adequately inform customers in their renewal notices about potential savings of 10% to 20% by opting for annual payments. The findings also indicated a loyalty penalty, with Kirkland observing that "loyalty doesn't pay." Customers who remain with the same insurer year after year without questioning prices are likely paying more than those who negotiate or new customers entering the market.

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Insurers that charged consumers more when they paid in instalments (weekly, fortnightly, monthly or quarterly) did not make it clear in renewal notices that they could save between 10 and 20 per cent by paying annually.

Despite the concerns about transparency and pricing, ASIC clarified that its findings do not constitute evidence of insurers gouging consumers. The regulator does not control the prices offered but oversees how insurers communicate with their customers. Kirkland highlighted that nearly one in three customers who questioned their premiums successfully secured a better deal, suggesting that proactive engagement can yield financial benefits.

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This also shows that loyalty doesn't pay. Customers who are loyal stay with the same insurer year after year and don't push back on prices are likely to be paying more than the customers that do push back, or the newer customers who've just come through the door.