At Huddle, we value your trust and want to keep you in the loop about what factors may impact insurance premiums. Just like many aspects of daily life, from groceries to event tickets, the insurance industry has seen significant cost increases. Even if your personal circumstances haven’t changed, there are industry-wide factors that play a part in determining premium prices each year.
We understand the importance of affordability when it comes to insurance premiums and are committed to providing support to help manage the impact of these changes. With the flexibility to manage your cover 24/7 online and the information in this guide, you’re in control. It’s how insurance should be.
Here are some of the key reasons why insurance premiums may increase and what you could do to manage this.
Why have car insurance premiums increased?
We understand that premium increases can be frustrating, no matter if you’ve been insured for one year or five. However, factors out of our control such as the current economy and impacts of severe weather events have impacted insurance premiums.
Insurance prices in Australia rose 16.4% over the past year - the biggest jump since 2001. This affects home, contents, and car insurance. Why? More natural disasters and higher claim costs (Australian Bureau of Statistics, March 2024 CPI Report).
Here are some of the key market factors affecting car and home insurance premiums:
Rising repair and rebuilding costs
- Supply chain shortages: Global shortages of parts and materials since COVID-19 have made car repairs (Rising cost of motor vehicle repairs AAMC and Finity report) and home rebuilds more expensive and time-consuming.
Producer Price Indexes released by the ABA highlights that COVID impacts have increased the price of construction and rebuild cost by up to 17.2 per cent in Western Australia alone (according to ICA).
- Higher wages: Skilled technicians and builders are in high demand. This has pushed wages up and contributed to higher repair costs. (Rising cost of motor vehicle repairs (AAMC and Finity report).
- New technology: Modern cars such as electric vehicles come equipped with sophisticated sensors, chips, cameras and other technologies. While modern homes are increasingly built with smart home technology and solar panels. These components can be expensive to repair or replace (AAMC and Finity Report).
- Manufacturing changes: Newer cars often have fewer but larger parts. In the event of an accident, these can be more costly to replace or repair. (Rising cost of motor vehicle repairs AAMC and Finity report). Modern homes are increasingly using more energy-intensive materials such as bricks, cement, glass and aluminium. Due to the higher cost of energy across the globe, these materials can be costly to repair or replace (according to the Housing Industry Association).
Economic factors
The overall rise in the cost of living also impacts the cost of providing insurance, driving up business expenses and potentially leading to higher premiums. For example, in 2022, for every dollar collected in home premiums, insurers' faced costs of $1.04 (ICA Aug 2023 Statement).
Government taxes and levies
Legislative and regulatory changes can also have an effect on insurance premiums.
Total government taxes and duties on homeowners can range from 20 to 40 percent on top of the cost of the premium depending on which state or territory you live in. They effectively reduce the return on an insurance policy, meaning in some States people and businesses must pay far more to achieve an adequate level of protection (according to ICA).
Weather events
Extreme weather events like floods and bushfires are becoming more frequent and severe. This surge in disaster-related claims may lead to higher premiums, as the risks associated with worsening extreme weather continue to rise.
- In December 2023, Queensland, New South Wales and Victoria were impacted by severe storms and extreme weather which correlated to an increase in home and motor claims, resulting in 99,900 claims (according to ICA Data Hub).
- In 2022 alone, there were more than 300,000 disaster-related claims lodged from four declared insurance events across the country, costing more than $7 billion in insured losses (ICA Aug 2023 Statement).
What personal factors can influence insurance premiums?
While some personal circumstances may be beyond your control, understanding how they affect your premium is still important. Here are a few examples, though this list is not exhaustive:
- Location: Areas with a higher risk of theft or vandalism and locations prone to severe weather events may impact your car or home insurance premium.
- Claims history: If you’ve previously made a claim this could increase your premium.
How can I lower my Huddle renewal premium?
Here are some tips that may help you save on your insurance premium:
- Monthly vs. annual payments: Paying annually generally costs less than monthly instalments.
- Increase your excess: A higher excess may lower your premium but may mean you will have to pay more in the event of a claim.
- Accurate valuation: Providing an accurate estimate of the value of your building and contents may improve savings. However, avoid underinsurance, as it’s important to make sure you cover the full cost of rebuilding or replacing your home and contents to reduce the risk of out-of-pocket expenses. Online calculators may be useful.
- Drive less: Driving less and adjusting your KMs listed under your policy may help you save.
- Add additional drivers: If other people with experience on the road drive your car frequently, it may be worth adding them to your policy as additional listed drivers - this may lower your premium. If a driver isn't listed in the event of a claim, you will attract an excess premium.
- Drivers under 25: Excluding drivers under 25 may lower your premium. In the event of a claim, undeclared drivers under 25 will attract an excess premium.
- Market vs agreed value: New cars with higher market values typically have higher premiums. Insuring your car for market value instead of agreed value may reduce costs but could result in a smaller payout if the vehicle is written off.
- Install security measures: If your home has alarms, window locks and deadlocked doors installed, declaring these security measures may lower your premium.
You can make changes to your policy via your online account 24/7. Or get support if you need assistance with any changes you’d like to make.
What are we doing about it?
We understand that keeping up with the cost of living is tough right now, and these challenges are affecting everyone. At Huddle, we're doing our best to lower the impact this has on you by providing you with:
- Flexible and customisable cover: You can manage your policy online 24/7 and build the coverage that suits you and your circumstances.
- 14-day-cooling-off-period: No hard feelings if you change your mind for whatever reason, get a 100% refund within the first 14 days of your policy starting. This is as long as you haven’t made a claim on your policy.
- Upfront prices online: We offer you our best prices online and upfront. We don’t provide discounts over the phone so you know you’re getting our best price online, without having to negotiate.
- 10% off when you combine Home and Contents insurance: Save up to 10% when you combine Huddle’s Home and Contents insurance.1
- Pay As You Drive: Save up to 30% when you drive less than 15,000km a year. So you can pay for the distance you need and pocket the savings.2
- Local insurance experts: Our Australian based team is here to answer any questions you might have.
Disclaimer:
- The 10% discount applies when you purchase a combined Building and Contents policy. The discount will apply to the first 12 months of your policy and will be reapplied for 12 months each time your policy is renewed, so long as both you continue to combine Building and Contents on one Home Insurance policy, and Huddle continues to offer the discount. Minimum premiums may apply that will reduce the savings discount. Huddle reserves the right to withdraw or extend this discount at any time.
- Saving of up to 30% derived from premium comparisons between Huddle unlimited kilometre comprehensive car cover option and Huddle Pay As You Drive comprehensive car cover option. Calculations based on a sample of profiles of existing Huddle car insurance customers who advised they drive under 15,000 km annually. Current as at 9 May 2024. Actual savings are determined by your individual circumstances, including the kilometres selected, excess chosen and other risk factors. Minimum premiums may reduce savings. Kilometres can be increased during the policy period, an additional premium is payable. In the event of an accident and the end odometer reading is exceeded or is below the start odometer reading on your Certificate of Insurance, an additional excess is applied.
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