Urgent co-ordinated action is needed to address the systemic drivers of rising motor cover premiums, the Insurance Council of Australia says. 

It has outlined six steps governments should take to tackle the root causes of labour shortages, supply chain blockages, accident towing and storage fees, insurance fraud and credit hire issues, and total-loss vehicles rules in NSW. 

In a policy paper, it says soaring input costs are behind a 42% jump in comprehensive motor insurance premiums since 2019, to an average of $1052 a year.

Profitability for insurers has declined in the same period, it says, with costs as a proportion of motor premium rising to 94% from 89% in mid-2019.  

ICA CEO Andrew Hall says insurers are “doing their bit to reduce costs” by streamlining operations, negotiating better repair arrangements and investing in the repair workforce, but governments need to make targeted reforms.  

“The reality is, many cost drivers are outside the industry’s control,” he said.

“The Insurance Council’s road map lays out practical steps that, if implemented, will remove inefficiencies and unfair costs in the system. 

ICA’s recommendations

• Address skills shortages in motor trades: expand skilled migration pathways and training for panel beaters, mechanics and vehicle painters; increase investment in electric vehicle repair training; improve motor trade apprenticeship completion rates. 
• Enhance automotive supply chain resilience: recognise the sector in federal government supply chain resilience initiatives; extend the Motor Vehicle Information Scheme to ensure independent repairers have access to essential parts; strengthen obligations on manufacturers to ensure the availability of parts.  
• Regulate credit hire and accident management companies: implement consumer protections against misleading advertising and inflated costs; strengthen oversight to curb excessive legal and hire car charges. 
• Regulate towing and storage fees: support Queensland reforms to cap storage fees and secondary towing costs; ensure effective enforcement and eventual expansion of WA’s Towing Services Bill 2024. 
• Combat insurance fraud: enhance insurer and law enforcement collaboration to target organised fraud networks; strengthen fraud detection and prevention initiatives across the industry. 
• Reform written-off vehicle rules: amend NSW regulations to let repairable total loss vehicles be re-registered after stringent safety inspections, to align with other states to improve salvage values and reduce claims costs.

See the ICA paper here.