Urgent Reforms Needed to Curb Rising Motor Insurance Premiums

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
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

ACCC Halts IAG's Bid to Acquire RAC WA's Insurance Operations

05 May 2026: Paige Estritori

The Australian Competition and Consumer Commission (ACCC) has recently opposed the proposed acquisition of RAC WA's insurance division by Insurance Australia Group (IAG). This decision stems from concerns that the merger could significantly reduce competition within Western Australia's insurance sector, potentially leading to higher premiums for consumers. - read more

South-West Queensland Councils Explore Community Insurance Mutual to Combat Rising Premiums

05 May 2026: Paige Estritori

In response to escalating insurance premiums, with some residents experiencing increases of up to 500%, councils in South-West Queensland are exploring the establishment of a community insurance mutual. This initiative aims to provide more affordable and accessible insurance options for local communities, particularly those in flood-prone areas. - read more

IAG Highlights Climate Change as a Factor in Rising Home Insurance Premiums

05 May 2026: Paige Estritori

Insurance Australia Group (IAG) has recently highlighted the impact of climate change on rising home insurance premiums across Australia. The insurer reports that increasingly frequent and severe weather events are contributing to higher costs for homeowners seeking coverage. - read more