ASIC has put car insurance companies on notice as accelerating premiums overtake inflation, leaving drivers very unhappy.

In the year to July 2025, car insurance premiums soared 8 per cent, far above the 3 per cent increase in the broader consumer price index.

ASIC commissioner Alan Kirkland said car insurance was the most complained about insurance product in 2024-25, and the biggest issue was premiums.

“This is a real source of consumer pain, and that’s not a surprise given that many people are battling cost-of-living concerns,” he said on Tuesday.

While several factors — including higher repair costs, taxes and theft — contributed to the rise, insurance providers failed to provide customers the reasons why their premiums were going up, ASIC found in a report released on Tuesday.

“Most insurers gave only generic explanations in supplementary documents, with some providing no explanations at all,” 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 methods for calculating premiums of why they 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, Kirkland said.

Insurers were also bad at disclosing when customers would be charged more for paying in instalments compared to a single annual bill.

ASIC urged 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 were 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. The state’s total car theft bill of $243 million in 2025 was higher than all the other states combined.

-with AAP