The Insurance Council of Australia (ICA) has released its Motor Insurance Policy Paper – A Roadmap for Reducing Rising Premiums, highlighting key cost drivers that are not just impacting insurance premiums but also service and repair costs. For Fleet Managers, the implications are clear: budgeting for repairs, minor damage, and routine maintenance will become increasingly challenging, and these pressures need to be carefully factored into annual financial plans.
Since 2019, comprehensive motor insurance premiums have risen 42 per cent, now averaging $1,052 annually. The ICA report points to corresponding cost increases in claims and repairs, with average claims costs also up 42 per cent over the same period. This is driven by several factors that Fleet Managers cannot afford to ignore.
Repair costs have climbed 26 per cent since 2022 alone. This rise is attributed to higher wages for skilled technicians, more expensive spare parts, and longer repair times. These are the same input costs faced by mechanical workshops that support fleet servicing and maintenance contracts. Labour shortages are compounding the problem, with nearly one in two vacancies in motor trades businesses reliant on overseas workers – a process still tied up in red tape and hampered by low apprentice completion rates.
Vehicle replacement costs are also impacting claim payouts and write-offs, with new car prices up 39 per cent and used car values 32 per cent higher since 2019. Rental car expenses have skyrocketed 70 per cent, partly due to repair delays and the growing presence of credit hire firms, whose fees are often three times the cost of standard rentals.
All these factors contribute to escalating repair costs — a trend that will continue to flow into fleet maintenance budgets. Insurers are warning that without government intervention, these pressures will persist. Proposed reforms include strengthening supply chains through wider access to parts under the Motor Vehicle Information Scheme, regulating towing and storage fees, and cracking down on fraud and credit hire practices that inflate costs.
For Fleet Managers, the takeaway is that service and maintenance costs are set to rise. This requires proactive conversations with accountants and finance teams. Budget forecasts must reflect the reality of higher parts prices, rising labour costs, and longer repair cycles. Cutting maintenance budgets in an attempt to reduce overheads is not sustainable and will likely result in operational risks and higher long-term expenses.
Instead, Fleet Managers should focus on optimising fleet size and measuring vehicle utilisation to ensure resources are aligned with business needs. Reducing under-utilised assets can offset rising per-vehicle costs. Building strong relationships with workshop partners and maintaining service schedules will also help mitigate unexpected expenses.
As ICA CEO Andrew Hall states: “Insurers are doing their bit to reduce costs – such as streamlining operations and investing in the repair workforce – but the reality is many cost drivers are outside the industry’s control.”
For Fleet Managers, the message is clear. Rising insurance and repair costs are not temporary fluctuations but part of a broader market shift. Budgeting accordingly and engaging finance teams early will ensure fleet operations remain cost-effective and sustainable in the years ahead.
