For two years, Australia's motor insurance conversation has circled a single culprit: electric vehicles (EVs), their unfamiliar parts and their unpriced risk. It's the wrong villain. The technology pushing up claims costs is now standard equipment in the petrol Ranger in the tradie's driveway and the hybrid Corolla doing the school run.
"We're treating it as a structural shift in the market," said Simon Donovan (pictured), executive general manager of sales and distribution at DKG Insurance Group. Donovan's point cuts against the industry's own often EV-centric narrative because repair costs, labour shortages, vehicle complexity, replacement parts, hire car costs and litigation have moved together and none of them are reverting to where they sat three or four years ago. That is a claims environment brokers need to price for now, not wait out.
The Insurance Council of Australia's (ICA's) own data backs the scale of the shift. Repair costs have climbed 26% since 2022 and repair bills now make up roughly 60% of total claim costs. Behind that figure sits a labour market reshaping itself around new vehicle technology: Australian Bureau of Statistics (ABS) wage data shows automotive electricians' pay rose 54.5% between 2018 and 2023 which is more than double the increase recorded for panelbeaters (32.9%) or vehicle painters (20.3%). That electrician premium is telling. It is the trade most associated with diagnosing and calibrating the sensors, cameras and radar units now fitted to mainstream petrol and hybrid models, not just EVs.
Spare parts tell the same story. The ABS consumer price index for spare parts and accessories, used by the ICA as a smash-repair proxy, rose 25.9% between 2019 and 2024. None of that trend is EV-specific.
Across the Tasman, the picture is similar. Insurance Council of New Zealand (ICNZ) figures show commercial and private motor claims rose from $1.4 billion in 2022 to $1.8 billion by 2025. IAG New Zealand has directly attributed part of that increase to advanced technology in newer vehicles, separate from weather-driven claims volumes. The insurer's own figures show the average cost of sub-let services - wheel alignments, recalibration, diagnostics - has risen from $95–$115 an hour to $115–$160 an hour, driven by the growing share of jobs that now require sensor recalibration rather than a straightforward panel repair.
That is the shift Donovan described to IB.
"EVs are certainly part of the conversation, but the bigger shift is the increasing complexity of all modern vehicles," he said. Advanced driver assistance systems, cameras, radar and sensors mean a repair that once meant a straightforward panel swap now frequently requires specialist calibration equipment and technical sign-off before a vehicle can go back on the road - regardless of what sits under the bonnet.
New Zealand's motor insurance data reinforces the point at a granular level: Vehicles fitted with advanced driver assistance systems (ADAS) cost roughly 60% more to repair on average than those without, driven by recalibration requirements, sensor complexity and parts costs - a comparison that cuts across fuel type entirely, not one that isolates EVs.
For brokers, the implication is a conversation that has to move beyond fuel type. Donovan argued that pricing increasingly needs to reflect not just the type of vehicle being insured but the technology it carries and the true cost of returning it safely to manufacturer standards. A base-model Ranger with adaptive cruise control and lane-keep assist now carries repair economics that can look more like a luxury import than a workhorse ute. So clients renewing sums insured on outdated assumptions are the ones left exposed.
The broader lesson, Donovan suggested, is that the industry can't price its way out of this with premium increases alone. Prevention, repair network quality and claims efficiency now matter as much as rate and brokers advising fleet and personal lines clients need to understand that the vehicle sitting in a garage today, however ordinary it looks, is not the vehicle insurers were pricing five years ago.
