Coalition leader Peter Dutton says Australians are facing “astronomical” rises in insurance premiums, creating a huge problem that federal government can help address.

Premiums are up 35% and policyholders pay “thousands and thousands” of dollars more each year, he told Sky News.

“There’s market failure at the moment, there’s no question about that,” he said. “There’s either a market concentration problem or – as some of the companies will point out – there’s a problem around reinsurance, which generally comes out of out of London, and it is having a catastrophic impact.”

Mr Dutton has threatened to divest insurance companies if he finds lack of competition is leading to consumer harm, saying this would ensure consumers “get a fair go” and pledging to “act very quickly” if elected on Saturday.  

Many Australians are opting to self-insure, he said, describing that as “a very risky prospect unless you know what you’re doing and you’re a bigger business with a big balance sheet”.  

Some people are deciding not to renew car and house insurance, he added. “They don’t have any choice. They just haven’t got the money to pay that insurance.”

The opposition leader said that during a recent visit to Victoria’s Grampians region, he met a buyer of a pub who could not settle the transaction because he could not secure insurance, and the finance had to be rearranged.

“The banks obviously want the insurance in place if they’ve got a mortgage against that property, so it’s having all sorts of distortionary impacts in the economy.

“For other groups who are facing astronomical increases in their insurance as well, it’s a huge problem, and I think it’s one the federal government can have an impact on, but at the moment the [Albanese] government just seems to have no interest at all.”

Labor’s Patrick Gorman, Assistant Minister to the Prime Minister, acknowledged in February there are “challenges” in the insurance market, and criticised Mr Dutton's comments on divestment as a "thought bubble".

From the latest Insurance News magazine: The challenges facing the next federal government, and the industry's plan to tackle them