The Insurance Council of Australia (ICA) released its report Motor Insurance: A Roadmap for Reducing Rising Premiums which blames a variety of factors, including overall inflation, higher claims frequency, excessive towing and storage costs, and rising fraud and legal costs for the 42% increase in car insurance premiums since 2019. The report does not focus on EVs but includes some relevant insights.
Average accident repair costs have increased from $2,914 in 2022 to $3,662 in 2024. The average premium is now above $1,000 annually, compared with an average claim size of around $5,200 across all private motor insurance (not just EVs).
EVs rate a mention on p. 16, with limited number of repair shops described as “driving up repair costs” although no data is provided. We have heard that insurers don’t have a lot of data yet on EV claims, so they are not even attempting to analyse this information.
The ICA makes a number of recommendations to address the increase in costs, including legal reforms to regulate unscrupulous credit hire and accident management operators, improving the supply chain for parts and addressing skill gaps in motor trades.
Missing from the ICA’s report is any discussion of operational inefficiencies within the concentrated Australian motor insurance industry, which has little incentive to innovative over many years.