The Motor Vehicle Insurance market for single vehicle and small fleet policyholders continues to be impacted by rising claims and repair costs.
While the availability of new vehicles has improved over the past year, these vehicles are more costly. Similarly, the cost of replacement parts and labour expenses continue to rise. This is further compounded by technological advances such as Advanced Driver Assistance Systems (ADAS) and Electric Vehicles (EV), which can lengthen overall repair times. All of the above are driving an overall increase in claims costs, straining insurer profitability and in turn, leading to increased premiums.
Rate increases of 5 to 10 per cent are the norm, with larger increases imposed for policyholders with adverse claims history.
The Insurance Council of Australia (ICA) is advocating for a number of reforms to help curb motor vehicle insurance premiums, including addressing motor trades skill shortages, enhancing supply chain resilience, regulation of accident towing services and combatting insurance fraud.
Heavy motor and large fleet insurance market
Although not entirely immune to rising claims costs, heavy motor and large fleet operators (15+ vehicles) have experienced greater stability in insurance pricing, particularly for those policyholders demonstrating strong risk management practices and maintaining low claims frequency. Rate changes typically range between 0 to 5 per cent, however competition among insurers in this sector remains robust.
Insurers remain receptive to enhancing policy coverage and offering reduced premiums to organisations that adopt proactive risk management measures, including:
- GPS tracking to ensure drivers remain on route and to assist with locating stolen vehicles.
- Camera monitoring to assist with recovery of costs from third parties.
- Driver fatigue and distraction management systems to mitigate safety risks.
- Telematics, enhancing fleet efficiency and operational insights.
- Comprehensive driver management – including recruitment, assessment, induction and training. Specific guidance on driver health and safety obligations can be found here.
To assist in expediting the claims process and achieving the maximum policy benefit, policyholders should consider:
- Third party valuation – ensuring fair claims settlements by accurately assessing vehicle value.
- Financial loss protection – which provides funding for temporary replacement vehicle hire during repair periods. See our article here.
Rental vehicle insurance considerations
For rental vehicle organisations, a well-structured hire agreement remains paramount, particularly in ensuring alignment with the terms and conditions of the applicable insurance policy. Hire agreements that effectively transfer risk to the hirer can significantly reduce claims frequency, resulting in greater pricing stability and the potential for claims experience discounts.
Electric vehicle insurance market trends
The demand for EV continues to grow, accompanied by ongoing discussions regarding fire safety concerns. Despite media speculation, comprehensive studies have demonstrated that properly maintained EV battery systems pose a minimal fire risk. Insurers remain actively engaged in assessing this exposure, with some integrating EVs into their own fleets—an indication of growing confidence in the technology.
Insurance coverage for electric vehicles remains readily available, with insurer appetite for such policies remaining strong. However, pricing is largely influenced by the cost of battery replacement for the specific vehicle in question.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2025
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