As premiums for comprehensive motor cover continue to climb, insurers in Australia are facing dual pressures: operational cost inflation and policyholder misrepresentation.
New insights from both the Insurance Council of Australia (ICA) and comparison site iSelect have revealed how economic and behavioural factors are compounding underwriting challenges.
The ICA’s recent “Motor Insurance Policy Paper – A Roadmap for Reducing Rising Premiums” reported that comprehensive car insurance premiums have increased by 42% since 2019, with average annual prices now exceeding $1,050.
This surge mirrors growth in claims expenses, which have followed a similar trajectory, driven by a mix of parts inflation, labour market shortages, and more complex vehicle repair needs.
Insurance fraud remains a persistent issue, with ICA estimating that fraudulent claims – ranging from staged collisions to inaccurate damage reports – cost the sector $560 million last year.
Meanwhile, new data from iSelect indicated that a segment of Australian drivers are knowingly providing inaccurate information to obtain cheaper insurance.
In a survey of over 3,000 motorists, around 6.8% admitted to misrepresenting details on their applications. The most common inaccuracies involved:
The data showed that younger drivers were far more likely to admit to this behaviour. Around 15.4% of those aged 18 to 24 reported misleading their insurer, compared to just 1.4% of drivers over 65. Women (7.7%) were also slightly more likely to admit to this than men (5.8%).
By state, New South Wales recorded the highest rate of inaccurate disclosures at 7.9%, followed by Victoria (7.3%) and Queensland (6.3%). The lowest rates were reported in South Australia and Tasmania.
Adrian Bennett (pictured), general manager for general insurance at iSelect, said misrepresenting personal information during policy sign-up can lead to serious consequences.
“While it may be tempting to misrepresent details such as your car’s parking location or annual mileage to lower insurance premiums, doing so can have serious consequences that may end up costing you more in the future. If an insurer discovers false information, they may cancel your policy or deny a claim – leaving you financially responsible,” he said.
He also noted that educating younger drivers on the long-term risks of inaccurate disclosures is crucial, given their higher likelihood of engaging in this behaviour.
