Urgent Reforms Needed to Curb Rising Motor Insurance Premiums

2

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

Share this news item:

Insurance News

Clear

Call for Stricter Timelines on Insurance Claims and Renewals 06 May 2025: Paige Estritori The Insurance Brokers Code Compliance Committee is advocating for significant changes to improve transparency and clarity in their industry standards, amidst ongoing reviews of the National Insurance Brokers Association (NIBA) code. This call to action coincides with the recent closure of feedback collection from stakeholders, setting the stage for a draft report expected next month. - read more

Insurers Under Scrutiny for Response to Alfred Flood Claims 05 May 2025: Paige Estritori In a recent development, Queensland MP David Lee has raised concerns about how insurance companies are addressing claims following the devastating floods caused by Ex-Tropical Cyclone Alfred. Businesses in Hervey Bay, a region heavily impacted by the floods, report facing significant hurdles in having their damage claims recognized. - read more

AFCA Rules Against Engine Theft Coverage in Motor Policy Dispute 04 May 2025: Paige Estritori An applicant's attempt to claim insurance coverage after the theft of an engine designated for his 1993 Nissan Skyline has been denied. Despite holding a comprehensive motor policy with IAG, the insured's claim was rejected after multiple engines were stolen in a brazen ram-raid at his vehicle repairer's workshop in November 2023, prompting an appeal to the Australian Financial Complaints Authority (AFCA). - read more

ACCC Strengthens Position Against Broker Commissions 02 May 2025: Paige Estritori In a recent submission to the professional code of practice review, the Australian Competition and Consumer Commission (ACCC) has reiterated its position against broker commissions. Echoing findings from its 2020 Northern Australia Insurance Inquiry, the ACCC advocates for extending the ban on conflicted remuneration to include brokers. - read more

Partial Settlement Reached in Homeowner's 'Slow Leak' Insurance Dispute 01 May 2025: Paige Estritori A recent ruling by the Australian Financial Complaints Authority (AFCA) has determined that Auto & General Services must cover a portion of a homeowner's insurance claim related to long-term water damage caused by a leaking pipe. The decision comes after a protracted dispute regarding the coverage of damages arising from a leak that reportedly developed over 12 months, spanning both before and during the insurance policy period. - read more