Australian motorists are facing another cost-of-living squeeze as comprehensive car insurance premiums continue to rise well ahead of inflation, with some policies now almost 60% more expensive than four years ago.
The latest increases come after another round of annual premium rises of around 10%, extending a trend that has pushed the cost of insuring some vehicles close to double what drivers were paying at the beginning of the decade.
ASIC has already raised concerns about the lack of transparency around how insurers calculate premiums, finding many customers are given only generic explanations when their renewal costs increase.
Repair costs climb sharply
Insurers say the main driver is the increasing cost of claims.
The average motor insurance claim has risen around 32% over the past four years to more than A$6,200 as replacement vehicles, spare parts and labour become more expensive.
Modern cars are also becoming more complicated and costly to repair because of cameras, sensors, electric components and advanced driver-assistance technology.
A shortage of automotive workers is adding further pressure.
Industry estimates point to a shortfall of around 38,000 automotive tradespeople and technicians, while employers are receiving significantly fewer applicants for vacant roles than they were two years ago.
Government pushes for transparency
The Federal Government is calling on insurers to provide fairer pricing and clearer explanations about how premiums are determined.
ASIC has similarly warned that vague disclosures are not enough and wants insurers to explain the major factors affecting prices, including risk assessments, excess levels and payment methods.
The issue is becoming more significant as households deal with higher mortgage repayments, food prices and energy bills.
For motorists, shopping around at renewal time is also becoming increasingly important, with long-term customers not always receiving the most competitive premium available.
The broader concern is that car insurance is becoming another essential household expense rising substantially faster than wages and general inflation.
