Insurance prices are skyrocketing—the surprising solution
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Insurance prices are skyrocketing—the surprising solution
For many Australians managing a budget is a delicate balancing act, and unexpected expenses can throw a wrench into the most carefully laid plans. But there’s one cost in particular that's been creeping up like never before and it may have already caught your eye on your latest bill.
Many have noticed their car insurance premiums rising. In fact, insurance costs have surged by a staggering 42.4 per cent since 2019, and the average comprehensive motor vehicle insurance policy now costs $1052 in 2024.
This significant increase is more than just a minor inconvenience; it's a trend that the leading body for general industry insurers, is eager to reverse. They have identified systemic cost drivers behind this surge and are calling for action to address them.
In their recently released Motor Insurance Policy Paper, the Insurance Council of Australia (ICA) has shed light on the reasons behind the rising costs.
The primary culprit? The cost of claims has risen by 42.2 per cent over the past five years, far outpacing the inflation rate of approximately 20 per cent during the same period.
This increase reflects “the higher costs associated with vehicle replacement, parts, and labour, as well as the growing complexity of vehicle technology,”
But the factors contributing to the rise in insurance premiums don't stop there.
Rental car costs have skyrocketed by 70 per cent since 2019, and there's been a significant uptick in fraud and legal expenses. Additionally, the volume of credit hire claims has quadrupled, further straining the industry.
Despite insurers' efforts to streamline repair processes and forge partnerships with repair networks to control costs, the profitability of motor vehicle insurance has declined.
This is a clear indication that the rise in premiums is not solely for the benefit of insurance companies but a necessary measure to keep them afloat.
The ICA is lobbying to reform the industry, with a focus on addressing motor trade skill shortages and strengthening supply chains.
They argue that independent repairers need fair access to vital parts and that the Motor Vehicle Information Scheme (MVIS) should be extended to support these businesses.
Moreover, the ICA is urging the government to regulate credit hire/accident management companies, towing and storage fees, and to take a stand against insurance fraud, which organised fraud rings increasingly commit.
The ICA is pushing for a specific legislative change: the alignment of New South Wales' written-off vehicle laws with those of other states, which would allow repairable write-offs to be re-registered after stringent safety checks.
Andrew Hall, CEO of the ICA, has expressed that the current trajectory of premium increases is unsustainable for Australian motorists. 'Insurers are doing their bit to reduce costs,' he says, 'but many cost drivers are outside the industry's control.'
The ICA's roadmap outlines practical steps for reform, which, if implemented, would remove inefficiencies and unfair costs from the system. The council is actively working with federal, state, and territory leaders to encourage collaboration on these solutions.
For Australian drivers, especially those of us who are more experienced on the road, affordable and sustainable motor insurance is not just a convenience; it's a necessity. Addressing these cost pressures at their source is crucial to ensuring that access remains within reach.
‘Australians deserve access to affordable and sustainable motor insurance, and that will only be possible if we address these cost pressures at their source.’ Andrew Hall added.
Interestingly, the cost of insurance varies significantly across the country. While Tasmania boasts the lowest average motor vehicle insurance premium, drivers in the Northern Territory and Victoria face the highest costs for comprehensive coverage.
As we navigate these financial challenges, it's essential to stay informed and advocate for changes that can ease the burden on our wallets. After all, the freedom and independence that come with driving are invaluable, and we must work together to keep them affordable.
We'd love to hear from you. Have you felt the pinch of rising car insurance premiums? What are your thoughts on the proposed industry reforms?
Share your experiences and opinions in the comments below, and let's discuss how we can drive towards a more sustainable future for Australian motorists.
For many Australians managing a budget is a delicate balancing act, and unexpected expenses can throw a wrench into the most carefully laid plans. But there’s one cost in particular that's been creeping up like never before and it may have already caught your eye on your latest bill.
Many have noticed their car insurance premiums rising. In fact, insurance costs have surged by a staggering 42.4 per cent since 2019, and the average comprehensive motor vehicle insurance policy now costs $1052 in 2024.
This significant increase is more than just a minor inconvenience; it's a trend that the leading body for general industry insurers, is eager to reverse. They have identified systemic cost drivers behind this surge and are calling for action to address them.
In their recently released Motor Insurance Policy Paper, the Insurance Council of Australia (ICA) has shed light on the reasons behind the rising costs.
Data show the cost of claims has been outpacing inflation rates. Image source: Photo by ALEEM UL HASSAN from Pexels
The primary culprit? The cost of claims has risen by 42.2 per cent over the past five years, far outpacing the inflation rate of approximately 20 per cent during the same period.
This increase reflects “the higher costs associated with vehicle replacement, parts, and labour, as well as the growing complexity of vehicle technology,”
But the factors contributing to the rise in insurance premiums don't stop there.
Rental car costs have skyrocketed by 70 per cent since 2019, and there's been a significant uptick in fraud and legal expenses. Additionally, the volume of credit hire claims has quadrupled, further straining the industry.
Despite insurers' efforts to streamline repair processes and forge partnerships with repair networks to control costs, the profitability of motor vehicle insurance has declined.
This is a clear indication that the rise in premiums is not solely for the benefit of insurance companies but a necessary measure to keep them afloat.
The ICA is lobbying to reform the industry, with a focus on addressing motor trade skill shortages and strengthening supply chains.
They argue that independent repairers need fair access to vital parts and that the Motor Vehicle Information Scheme (MVIS) should be extended to support these businesses.
Moreover, the ICA is urging the government to regulate credit hire/accident management companies, towing and storage fees, and to take a stand against insurance fraud, which organised fraud rings increasingly commit.
The ICA is pushing for a specific legislative change: the alignment of New South Wales' written-off vehicle laws with those of other states, which would allow repairable write-offs to be re-registered after stringent safety checks.
Andrew Hall, CEO of the ICA, has expressed that the current trajectory of premium increases is unsustainable for Australian motorists. 'Insurers are doing their bit to reduce costs,' he says, 'but many cost drivers are outside the industry's control.'
The ICA's roadmap outlines practical steps for reform, which, if implemented, would remove inefficiencies and unfair costs from the system. The council is actively working with federal, state, and territory leaders to encourage collaboration on these solutions.
For Australian drivers, especially those of us who are more experienced on the road, affordable and sustainable motor insurance is not just a convenience; it's a necessity. Addressing these cost pressures at their source is crucial to ensuring that access remains within reach.
‘Australians deserve access to affordable and sustainable motor insurance, and that will only be possible if we address these cost pressures at their source.’ Andrew Hall added.
Interestingly, the cost of insurance varies significantly across the country. While Tasmania boasts the lowest average motor vehicle insurance premium, drivers in the Northern Territory and Victoria face the highest costs for comprehensive coverage.
As we navigate these financial challenges, it's essential to stay informed and advocate for changes that can ease the burden on our wallets. After all, the freedom and independence that come with driving are invaluable, and we must work together to keep them affordable.
We'd love to hear from you. Have you felt the pinch of rising car insurance premiums? What are your thoughts on the proposed industry reforms?
Share your experiences and opinions in the comments below, and let's discuss how we can drive towards a more sustainable future for Australian motorists.
