By Jacob Shteyman

Drivers may be paying more for car insurance than they should, with insurers leaving customers in the dark about why premiums are surging above inflation.

In the 12 months to July 2025, car insurance premiums soared eight per cent, far above the three per cent increase in the broader consumer price index.

While a number of factors – including higher repair costs, taxes and theft – have contributed to the rise, insurance providers failed to provide customers the reasons why their premiums were going up, financial watchdog ASIC found in a report on Tuesday.

“Most insurers gave only generic explanations in supplementary documents, with some providing no explanations at all,” ASIC commissioner Alan Kirkland said.

“This fails to meet the needs of customers trying to understand the reasons for significant price increases.”

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 to decide whether they should stay with their current insurer or shop around, Mr Kirkland said.

Insurers were also bad at disclosing when customers would be charged more for paying in instalments compared to 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 to understand 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 all the other states combined.