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

The Australian Securities and Investments Commission (ASIC) has issued a warning to car insurance companies following a review that found premiums have surged far beyond inflation in the last year. The watchdog also discovered that five insurers operating under eight brands are not adequately explaining why premiums have risen. Insurance Council of Australia (ICA) is currently examining ways to provide clearer explanations to customers regarding premium increases.

According to ASIC's report, car insurance premiums increased by 8% in the year to July 2025, following a growth of over 42% between 2019 and 2024. ASIC examined policies from eight brands of five insurers, which together make up nearly three-quarters of the market, after receiving numerous complaints from consumers about the industry.

Motor vehicle insurance premiums climbed by 8% in the year to July 2025, compared to growth of over 42% between 2019 and 2024. ASIC reviewed policies from eight brands of five insurers, which together account for nearly three-quarters of the market, in response to a significant rise in consumer complaints. The primary reason consumers complained about car insurance in 2024-25 was the high premiums.

ASIC Commissioner Alan Kirkland stated, "This is a real source of consumer pain, and that's not a surprise given that many people are battling cost-of-living concerns. Those rises are well above the rate of inflation, and... consumers are unhappy, they're complaining, and they want to understand more about the reasons for those significant premium increases."

The review found that renewal notices from the five insurers did not clearly explain why premiums were rising above inflation, leaving customers unaware of the reasons behind the increases. Insurers who charged customers more for payment in installments did not clearly indicate that they could save between 10 and 20% by paying annually.

ASIC's findings reveal that loyalty doesn't necessarily pay, as customers who remain with the same insurer year after year may be paying more than those who switch insurers or push back on prices. The report highlights that consumers should understand the reasons behind premium increases and consider negotiating better deals.

However, ASIC refrains from accusing insurers of gouging customers. Instead, the regulator emphasizes the importance of insurers communicating premium changes and reasons for price increases clearly to their customers. The ASIC report comes amid broader scrutiny of insurers, with the federal government planning to introduce standard definitions in premium notices and the industry's peak body developing an enforceable code of conduct for premium communication.

The Insurance Council of Australia (ICA) acknowledged the need to improve premium explanations and expressed willingness to engage with the federal government. Insurance companies, including RACQ, Allianz Australia, and Youi, have responded to the report, with some offering explanations for premium increases and encouraging customers to contact them with questions.