Key facts
- Car owners should challenge insurers over steep premium hikes, according to the Australian Securities and Investments Commission (Asic).
- Asic found that insurers failed to adequately explain premium calculations and price changes to customers.
- Car insurance premiums rose 8% in FY25, significantly outpacing inflation.
- Approximately one-third of customers who questioned their insurer before renewal secured a lower premium.
- Five insurers offered discounts for annual payments, but this was not clearly communicated.
- General insurance, especially motor vehicle products, received the most complaints in the financial services industry.
Car owners in Australia are being urged by the corporate regulator to challenge their insurers over significant premium increases, as many companies are raising prices faster than inflation without adequate explanation. The Australian Securities and Investments Commission (Asic) found in a report released Tuesday that none of the eight insurers reviewed clearly explained the reasons behind premium calculations or changes in renewal documents.
Asic commissioner Alan Kirkland stated that insurers often rely on customers not questioning premium hikes. He advised consumers to "call their bluff – demand answers, challenge them on the increase and ask for a better deal." The report highlighted that about one in three customers who contacted their insurer before renewing their policy secured a lower premium without any changes to their coverage.
Car insurance premiums have become a substantial household expense, rising 8% in the 2025 financial year, according to Asic, far exceeding general inflation. Consumer group Choice estimates a 3.1% rise in the first four months of 2026 alone. Canstar data indicates comprehensive car insurance premiums increased by an average of $111 to $2,460 in the year to June.
Furthermore, five of the surveyed insurers charged 10% to 20% less for annual premium payments compared to instalments, but this saving was not clearly disclosed in renewal notices. Asic noted that these disclosure practices hinder customers' ability to understand, challenge, or compare premium increases. Five insurers also failed to provide previous-year comparisons for insured value or excess on renewal notices, or scattered cost information across different pages, complicating price comparisons.
The Insurance Council of Australia acknowledged the need for clearer explanations and is exploring options to improve communication. A spokesperson noted that motor vehicle claim costs have risen 47% since 2020 due to increased repair and parts expenses, and encouraged customers to talk to their insurers and shop around. Asic's data shows general insurance, particularly motor vehicle products, was the most complained-about financial product last financial year, with premiums being the primary issue.