Urgent Reforms Needed to Curb Rising Motor Insurance Premiums
Urgent Reforms Needed to Curb Rising Motor Insurance Premiums
2
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Insurance Council of Australia (ICA) has called for urgent action to address the factors driving the significant rise in motor insurance premiums.
In a detailed policy paper, the ICA has outlined a strategic plan, urging government intervention to address key issues like labour shortages, supply chain disruptions, and inefficiencies in accident management practices.
This call to action follows a striking 42% increase in comprehensive motor insurance premiums since 2019, with the average premium now reaching $1052 annually. The underlying cause is attributed to escalating input costs that have outpaced compensatory measures by insurers. These rising costs have also led to a decline in insurer profitability, as evidenced by the increase in claims costs ratio from 89% to 94% over the past six years.
Andrew Hall, CEO of the ICA, emphasized the industry's commitment to cutting expenses through various internal measures like optimizing operations and enhancing the repair workforce's skills. However, he points out that many cost drivers extend beyond the insurance industry's control, necessitating decisive government-led reforms.
The proposed reforms by the ICA aim to tackle multiple areas:
Alleviating skills shortages in motor trades by expanding skilled migration pathways, increasing investment in training for electric vehicle repairs, and boosting apprenticeship completion rates.
Enhancing the automotive supply chain’s resilience by ensuring independent repairers have access to essential parts and obligating manufacturers to guarantee part availability.
Regulating credit hire and accident management companies to protect consumers from misleading practices and inflated prices.
Implementing regulations on towing and storage fees, following Queensland's model to cap excessive charges and effectively enforcing reforms like WA’s Towing Services Bill 2024.
Strengthening efforts to combat insurance fraud by improving collaboration between insurers and law enforcement and enhancing fraud detection initiatives.
Revising written-off vehicle rules in NSW to allow repairable vehicles to be re-registered after passing stringent safety checks, aligning them with practices in other states.
The ICA's proposed roadmap highlights necessary steps to streamline processes, eliminate systemic inefficiencies, and deliver fairer costs across the insurance landscape, thereby relieving pressure on consumers. The suggested interventions, if adopted, could lead to a more sustainable and balanced market, benefiting both insurers and policyholders.
Published:Tuesday, 25th Mar 2025 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
Recent research conducted by the Insurance Council of Australia (ICA) and the Department of Foreign Affairs and Trade (DFAT) has unveiled a concerning trend: approximately 14% of Australian travellers embark on international journeys without any form of travel insurance. This statistic has prompted Allianz Partners to urge Australians to reconsider the importance of securing adequate coverage before travelling abroad. - read more
In 2024, medical incidents emerged as the leading cause of travel insurance claims among Australian travellers, accounting for more than 40% of all claims handled by nib Travel. This trend underscores the critical importance of securing comprehensive travel insurance to mitigate the financial risks associated with medical emergencies abroad. - read more
Qantas Travel Insurance has been recognised in the 2024 Mozo Experts Choice Awards for Travel Insurance, showcasing its exceptional value for their Annual Multi Trip Travel Insurance policy. - read more
Recent findings from the PwC Insurance Banana Skins Survey reveal that Australian insurers are lagging behind their global counterparts in preparedness for emerging risks, particularly in the realms of cybersecurity and artificial intelligence (AI). This survey, encompassing insights from 698 insurance executives across 42 territories, highlights a concerning trend for the Australian insurance sector. - read more
Insurance Australia Group (IAG) has recently highlighted the escalating impact of climate change on home insurance premiums across the nation. The insurer's latest report indicates that the increasing frequency and severity of weather events are contributing to higher costs for homeowners seeking coverage. - read more
Australia's insurance industry has reported a substantial after-tax profit of $6.1 billion for the year 2024, marking a significant increase from the five-year average of $2 billion. This remarkable financial performance is primarily attributed to strategic premium adjustments and a period of relatively mild weather conditions. - read more
Recent findings from the PwC Insurance Banana Skins Survey reveal that Australian insurers are trailing behind their global counterparts in risk preparedness. The survey, which gathered insights from 698 insurance executives across 42 territories, indicates that Australian insurers scored 6.6% lower on the Preparedness Index compared to the global average. - read more
Australia's insurance sector has reported a substantial after-tax profit of $6.1 billion for the year 2024, according to KPMG's annual review. This figure is three times higher than the five-year average of $2 billion, highlighting a significant financial upturn for the industry. - read more
Consumer advocacy group Choice has released a report indicating that several Australian insurers have implemented substantial increases in home insurance premiums over the past year. Notably, Kogan, RAC, and Honey have raised their average premiums by more than 30%, significantly outpacing the industry average increase of 16%. - read more
RACQ Insurance has recently announced the cessation of coverage for rideshare and food delivery vehicles, effective from November 3, 2023. This decision stems from a notable increase in claims associated with these services, prompting the insurer to reassess its offerings. - read more
Farming in Australia is more than just a way of life; it is a critical sector that supports the nation’s economy and food supply. However, managing a farm comes with its own set of unique risks. From natural disasters to equipment failures, farmers face numerous challenges that can impact their livelihood. - read more
Agroforestry is a transformative approach to land management that integrates trees into agricultural landscapes. In Australia, where farmers contend with variable climates and environmental challenges, agroforestry offers a resilient pathway to productivity and sustainability. - read more
Australian farmers face a unique set of challenges due to the vast and varied climate conditions that sweep across the continent. From the scorching heat and prolonged droughts of the Outback to the tropical storms and torrential rains of the northern regions, weather-related risks are an integral part of agricultural life in Australia. - read more
Farming, at its core, is an enterprise fraught with uncertainty. Weather calamities, pests, diseases, and fluctuating market conditions can all impact the output and quality of produce. This is where crop insurance proves its worth, serving as a safety net for farmers against the myriad risks they face each season. - read more
Welcome to the world of farming, where the fruits of your labor are as tangible as the soil you till. But just as the land is subject to the whims of nature, so too is the business of agriculture. This is where farm insurance becomes essential. Farmers face a set of challenges and uncertainties unlike any other industry, primarily due to the unpredictable forces of weather. - read more
Farm liability insurance is a type of coverage that protects farmers from financial losses due to legal claims and lawsuits. This insurance is crucial for safeguarding your farm against various liabilities that may arise from farm operations. - read more
In the dynamic world of Australian agriculture, farm equipment plays a crucial role in the day-to-day operations of farms. From tractors to harvesters, having the right machinery means managing your farm more efficiently. However, the high value of this equipment makes it essential to protect it adequately through insurance. - read more
In the world of agriculture, having the right insurance coverage is essential. Farming is a high-risk industry that deals with unpredictable elements, and insuring your farm equipment can safeguard your livelihood. - read more
Farming in Australia is not just a job, it's a way of life. However, it’s also a livelihood that comes with its own unique set of risks. From unexpected weather events to machinery breakdowns, the life of an Australian farmer is fraught with uncertainties. - read more
Welcome to the first steps in future-proofing your farming legacy. When we think about the hustle and bustle of daily farm life, it's easy to overlook the critical importance of estate planning. For the Australian farmer, estate planning is not just a matter of securing your assets; it's about ensuring the survival and progression of your hard-earned labour to the next generation. - read more
Need a Quote?
Start your free farm insurance quote comparison here.
Knowledgebase
Replacement Cost: The amount it would cost to replace or rebuild an insured asset with one of similar kind and quality, without depreciation.