Many drivers find themselves confronting steep hikes in car insurance premiums, often without a clear understanding of the underlying reasons. Insurers, unfortunately, offer minimal transparency regarding the factors driving these costs upward.
In the year leading up to July 2025, car insurance premiums climbed by 8 percent, significantly outpacing the broader consumer price index increase of just 3 percent. This rapid rise adds financial strain for households, even as general inflationary pressures have begun to ease.
Although factors such as elevated repair costs, increased taxes, and a surge in thefts are driving these price hikes, insurance companies have not effectively communicated these reasons to policyholders, according to an ASIC report released on Tuesday.
“Most insurers offered only vague explanations in their supplementary documents and, in some instances, gave no details at all,” said ASIC commissioner Alan Kirkland.
“This lack of clarity leaves customers struggling to comprehend the significant price increases they are experiencing.”
None of the eight insurance brands involved in ASIC’s review, which account for 72 per cent of the market, explained the key factors behind how the premium was calculated or why it had changed since the previous year.
Without being told the reasons for their premium increase, customers were being denied crucial information needed to decide whether to stay with their current insurer or shop around, Kirkland said.
Insurers were also poor at disclosing when customers would be charged more for paying in instalments than for a single annual payment.
ASIC called on insurers to improve renewal and quote documents to make information about premiums clearer, more useful and easier to compare.
A spokesperson for Insurance Council of Australia said the industry recognised the need to support customers in understanding what they are paying and why.
“Premiums have been under pressure across the country due to a range of factors including escalating extreme weather costs, insurance-linked taxes, and rising repair and vehicle parts costs, with motor claims costs up 47 per cent since 2020 and building costs up 44 per cent since 2022,” the spokesperson said.
“This is a highly competitive market, and we encourage every customer to talk to their insurer and shop around at renewal.”
One reason behind the increased cost of vehicle insurance claims was a surge in car thefts in Victoria, where the total car theft bill of $243 million in 2025 was higher than in all the other states combined.