2025 Guide to Insurance Premiums in Australia

Australians are feeling the pinch as insurance premiums creep higher in 2025, with everything from home and car insurance to private health cover affected by shifting market dynamics and regulatory reforms. Whether you’re renewing your policy or shopping for a better deal, understanding how your premium is calculated—and what you can do about it—has never been more crucial.

What’s Driving Insurance Premium Changes in 2025?

Several factors are converging to reshape the insurance landscape this year. Here’s what’s behind the headlines:

• Climate-Related Claims: Catastrophic weather events, like the 2024-25 summer floods in Queensland and NSW, have led to a spike in claims, pushing up costs for insurers and, in turn, policyholders.

• Regulatory Updates: The Australian Prudential Regulation Authority (APRA) has introduced stricter capital requirements for insurers, aiming to shore up financial stability. While this move protects consumers, it also means higher operating costs for insurers, some of which are passed on through premiums.

• Inflation and Supply Chains: The ongoing effects of global inflation and supply chain disruptions are making repairs and replacements more expensive, especially for car and home insurance.

How Insurers Calculate Your Premium

Your insurance premium isn’t just a random number—it’s the outcome of a detailed risk assessment, which can vary by insurer and policy type. Here are the main factors at play in 2025:

• Personal Risk Profile: For car insurance, factors like your age, driving record, and postcode matter. Home insurance considers property value, age, and location.

• Coverage and Excess: Higher cover limits and lower excesses mean higher premiums. Opting for a higher excess can help you save, but it’s a balance between upfront costs and risk.

• Claims History: Frequent claims can see your premiums climb or even your policy declined. Insurers are increasingly using data analytics to assess risk over longer periods.

• Policy Bundling: Bundling multiple policies (e.g., home and car) with one insurer can still score you a discount, but these deals are becoming less generous as margins tighten.

Example: After the 2025 Brisbane floods, residents in affected postcodes saw average home insurance premiums rise by 18%, according to the Insurance Council of Australia. Meanwhile, drivers under 25 in metro Sydney now pay up to 25% more than in 2023, reflecting both inflation and claims data.

Smart Strategies to Manage Your Premiums

Rising insurance costs aren’t inevitable. Here’s how Australians are fighting back in 2025:

• Annual Policy Reviews: Don’t just auto-renew. Review your cover each year, compare at least three providers, and use online calculators to benchmark your price.

• Up Your Excess: If you’re a low-risk customer, consider raising your excess to cut your annual premium. Just be sure you have the savings to cover it in a pinch.

• Update Your Details: Renovated your home, installed security, or changed how you use your car? Let your insurer know—these updates can lower your risk and premium.

• Look for Loyalty (and Intro) Discounts: While loyalty doesn’t always pay, some insurers are rolling out new customer discounts to attract business in a competitive market.

• Consider Usage-Based Insurance: New in 2025, several insurers now offer telematics-driven car policies, where premiums are based on how, when, and how far you drive.

What’s Ahead: Policy Trends and Consumer Protections

Looking forward, expect more changes as regulators and insurers respond to ongoing challenges. The federal government’s 2025 Insurance Affordability Taskforce is reviewing options to make cover more accessible, especially in disaster-prone regions. Watch for:

• Reinsurance Pools: Expanded government-backed pools may help cap costs for flood and cyclone cover in high-risk areas.

• Improved Disclosure: From July 2025, new rules require clearer explanations of how your premium is set and how you can save—making it easier to shop around.

• Digital-First Service: More insurers are offering app-based policy management and instant quote adjustments, putting you in control of your cover and costs.

Ultimately, staying informed and proactive is the best way to keep your insurance premiums manageable in 2025. Don’t settle for a one-size-fits-all approach—there are still ways to tailor your cover and make your money go further.