If Australian general insurers have enjoyed one dependable source of underwriting profit over the past two and a half years, it is domestic motor insurance. While householders imploded in December 2025 and commercial property has swung between strong profit and near-breakeven, motor has quietly posted a positive insurance service result in every single quarter of the Australian Prudential Regulation Authority (APRA) dataset, which runs from December 2023 to March 2026.
In the March 2026 quarter, domestic motor reached its best-ever quarterly underwriting result in this dataset: $472 million. Gross written premium for the class came in at $4.83 billion, the highest quarterly figure recorded - up 23% from $3.92 billion in December 2023. The line is larger, more profitable, and for now more stable than any other major class in the market.
But inside those headline numbers, a trend is developing that the industry cannot afford to ignore.
Net claims incurred in the domestic motor class have increased from $2.34 billion in the March 2024 quarter to $2.86 billion in March 2026 - a rise of 22% over two years. Over the same period, gross written premium (GWP) grew from $4.22 billion to $4.83 billion, a 14.5% increase. Claims are growing faster than premium income.
The December 2025 quarter offered the starkest illustration: net claims reached $2.88 billion in a single quarter, the highest in the dataset, against GWP of $4.57 billion. The insurance service result for that quarter fell to $183 million - still positive, but the weakest result since December 2023.
The March 2026 result rebounded strongly to $472 million, with claims easing to $2.86 billion. But the underlying trend - quarterly claims up roughly $500 million in two years against premium growth of roughly $600 million - leaves very little margin for error if claims inflation continues at its current pace.
Domestic motor insurance: GWP vs net claims incurred ($M)
Quarterly, December 2023 to March 2026 — all APRA-authorised general insurers
Source: APRA, Quarterly General Insurance Performance Statistics Database, Sep 2023–Mar 2026, released 29 May 2026.
The causes are well understood, if not yet resolved. Vehicle repair costs have risen sharply as a result of parts supply constraints, the increasing complexity of modern vehicles - particularly EVs and vehicles with advanced driver assistance systems - and higher labour rates at panel shops. Total loss thresholds have been rising as vehicles become more expensive to repair relative to their market value, pushing up average claims costs even in quarters where incident frequency has not materially changed.
Adam Swirski (picutured left), head of motor product and portfolio at Suncorp, said technology embedded in modern vehicles is now a routine driver of repair costs.
"For example, a ding to a bumper may also affect the parking sensors or cameras, which also need to be repaired and recalibrated with the car's computer," Swirski said.
The rapid arrival of new manufacturers is adding a further layer. Swirski said more than 120 Chinese make-model combinations are now available for sale in Australia, with additional original equipment manufacturers (OEMs) and models expected to enter the market - a diversity that offers consumers choice and competitive pricing but brings its own claims-cost problems.
"In particular, concerns are growing regarding the availability of replacement parts required for vehicle repairs, as well as the effective administration of warranty claims, especially in relation to some newer OEMs," he said.
As Insurance Business has previously reported, claims cost escalation in Australia is being treated less as a short-term cycle and more as an ongoing structural feature shaped by supply chain pressures, inflation and the increased cost of technology-intensive vehicle repairs. The industry has absorbed these increases through premium growth to date. The question is whether that premium growth can continue at a pace that keeps ahead of claims.
The EV pressure on the claims line is about to intensify. Earlier this week, IB reported on the news that BYD sold 18,881 vehicles in Australia in June 2026 - the biggest month for any brand other than Toyota since Holden in 2003 – while EV insurance quote requests jumped 121% year on year in April and average comprehensive EV premiums climbed to about $2,300. Every one of those vehicles now enters the domestic motor claims pool.
Not every underwriter sees the EV component of the claims trend as permanent. Tom Hall (pictured right), a specialist motor underwriter, told IB that the industry's problem is less the vehicles themselves than the absence of pricing history on them - and pricing without history cuts both ways.
"Anytime that an underwriter is unsure, it means obviously we have to start high and refine down or we see sometimes we start low and we end up in the wrong place and it causes problems," Hall said.
His longer-run view is that the current pressure is transitional rather than structural.
"I think once we get to that point, it's actually going to be a bit of a moot point in the scheme of things, to be honest with you," Hall said, of the industry nailing down EV repair costs and repair methodology as more workshops become equipped for electric vehicles.
The softening commercial market makes the domestic motor line's stability more significant, not less. As Insurance Business has reported, Australia's commercial insurance market is in soft territory through the first half of 2026, with property rate reductions of approximately 10–20% recorded across the Pacific region in late 2025. In that environment, a personal lines class generating consistent underwriting profit is a material contributor to sector health.
For motor-focused brokers, the data is a prompt for a specific conversation with fleet and personal lines clients: the combination of rising premium rates and rising claims costs means that vehicles which are underinsured - particularly agreed value policies that have not been reviewed in recent years - represent a growing exposure. A vehicle insured at its 2022 value in a market where repair costs and replacement prices have both risen materially is a policy that may not perform as the client expects at claim time.
Domestic motor has been the industry's quiet achiever through one of its most turbulent periods. Whether it can hold that position as the claims trend steepens is the question that will define the line's contribution to sector profitability over the next two years.
Source: APRA, Quarterly General Insurance Performance Statistics Database, September 2023 to March 2026, released May 29 2026. All figures are in Australian dollars and based on APRA-authorised general insurers. Lloyd's Australian operations are not included
