By Melissa Meehan

Australians are paying hundreds of dollars more for comprehensive car insurance as costs across the sector soar.

Insurance premiums have risen 42 per cent since 2019 to an annual average of $1052, according to a report by the Insurance Council of Australia.

But the council insists profit margins are “not the main culprit”.

It says insurers’ motor insurance costs as a proportion of premiums collected have increased by five per cent over the same period.

Motor insurance acts as a financial safety net for drivers, protecting them from financial liability if they are involved in accidents or if their vehicles are damaged.

Lockdowns during the COVID-19 pandemic kept average premium prices flat from 2019 to 2021 due to lower claim frequency.

Since then, premiums have risen substantially with the council attributing that to inflation.

Premiums vary substantially across the nation with the average NSW driver paying $1176 per policy, about $400 more than those in Tasmania.

In 2019, Australians spent an average of 43.6 per cent of one week’s income on annual comprehensive motor insurance. That figure had risen to 53.7 per cent by June 2024.

Northern Territory drivers are paying as much as 62.39 per cent of their weekly income on car insurance.

The rising costs were unsustainable for Australian motorists, the council’s chief executive Andrew Hall said.

“Insurers are doing their bit to reduce costs – such as streamlining operations, negotiating better repair arrangements, and investing in the repair workforce – but the reality is many cost drivers are outside the industry’s control,” Mr Hall said on Sunday.

“We need governments to step up with targeted reforms.”

Rising expenses across the sector included claim costs, repair costs, vehicle replacement for written-off vehicles, rental car costs and rising fraud and legal expenses.

Addressing labour shortages, strengthening motor industry supply chains, regulating accident towing and storage fees and cracking down on insurance fraud would help manage costs passed on to consumers, the council said.

“Australians deserve access to affordable and sustainable motor insurance, and that will only be possible if we address these cost pressures at their source,” Mr Hall said.