“Faithfulness isn’t rewarded”: Regulator presses auto insurers on premium hikes

Australia’s corporate watchdog has trained its sights on

Australia’s corporate watchdog has trained its sights on the country’s largest motor insurers, accusing them of failing to justify why policyholders are facing premium increases that outpace the cost of living.

In a report released on Tuesday, the Australian Securities and Investments Commission (ASIC) said that while insurers have cited rising repair costs and inflation as drivers of higher premiums, they have not provided transparent, customer-specific explanations for the sharp jumps many drivers have seen at renewal.

The regulator’s review, which examined pricing practices at several major insurers, found that long-standing customers are often hit with bigger increases than new policyholders, despite having no claims history. ASIC chair Joe Longo said the industry needs to do more than simply point to external pressures.

“Consumers who have stayed loyal to their insurer

“Consumers who have stayed loyal to their insurer are being asked to pay more without a clear breakdown of why their individual premium has risen,” Longo said. “That lack of transparency is simply not good enough.”

ASIC is now demanding that insurers provide itemized reasons for any increase above general inflation, including specific data on how risk factors, discounts, and loyalty loadings are applied. The regulator has given firms until the end of the year to overhaul their renewal notices and make pricing explanations clearer.

The Insurance Council of Australia responded by saying it would work with members to improve communication, but warned that rising costs from accidents, parts shortages, and extreme weather events were putting upward pressure on premiums across the board.

Consumer groups have backed ASIC’s push, arguing that

Consumer groups have backed ASIC’s push, arguing that the current system leaves drivers with little ability to compare or challenge their bills. “It’s time insurers treated loyal customers like valued partners, not cash cows,” said one advocate.

ASIC has stopped short of naming individual companies in its report, but has indicated it will take enforcement action if insurers fail to comply with the new disclosure requirements.