Almost two-thirds of recovered stolen vehicles in Australia contain potentially dangerous items or contaminants, according to Insurance Australia Group’s (IAG) latest annual quality report.
The finding, disclosed in IAG’s 14th Quality Report for the 2025-26 financial year, highlights a motor claims risk that extends beyond standard collision or weather damage. Hazards identified in recovered vehicles include drug paraphernalia, biological contamination, weapons, and other materials not visible during routine inspections.
IAG said it works with specialist hazard inspection providers, including SHARPS Australia, to assess recovered vehicles before repairs begin.
The contamination data takes on added weight given the scale of motor theft nationally. The Insurance Council of Australia (ICA) reported in June 2026 that motor theft claims reached 29,000 across the country, with total incurred costs of $485 million. Victoria accounted for more than all other analysed states combined, with $243 million across 12,500 claims.
For brokers, the data raises a practical question: whether stolen vehicle contamination risks are adequately reflected in the claims advice and coverage discussions they have with fleet and motor clients. The ICA data also aligns with earlier reporting that Victoria’s theft crisis is distorting the national motor insurance picture.
Read more: IAG joins global insurer push to cut the cost of repairing cars
IAG’s motor assessors completed 79,407 quality inspections during FY26, recording an average repair quality score of 98%. Potential safety issues accounted for 0.1% of authorised repairs, while behavioural issues made up 0.21%.
On the property side, the insurer’s builder network completed 25,409 repairs and conducted 4,808 quality reviews, with an average score of 91%. Property defects were predominantly cosmetic, including painting imperfections, minor ceiling and wall lining issues, and misaligned doors and screens.
Luke Gallagher, IAG’s executive general manager of retail claims, said the repair environment is growing more complex. “The past year has reinforced the importance of delivering quality repairs in an increasingly complex environment. Vehicles are rapidly becoming more technologically advanced, homes are incorporating increasingly innovative features, materials, and construction methods, and severe weather events continue to test the resilience of people, properties, and communities across Australia,” Gallagher said.
The report details IAG’s research into vehicles fitted with Advanced Driver Assistance Systems (ADAS), which include autonomous emergency braking, lane keeping assist, and blind spot monitoring. Even minor collision damage can compromise sensors, cameras, and radar systems, requiring calibration, diagnostic testing, and adherence to manufacturer repair procedures.
RedBook data published by carsales in July 2026 found that ADAS features classified as “definitely standard” appeared in 66.5% of new vehicles sold in Australia in the first quarter of 2026, up from under 10% in 2020.
That rapid adoption is feeding into claims costs. The ICA’s March 2025 motor insurance roadmap reported that repair costs had risen 26% since 2022 and average claims costs had climbed 42% between 2019 and 2024, driven partly by the growing complexity of vehicle technology.
Brokers placing motor cover should expect these trends to continue putting upward pressure on repair timelines and claims severity. IAG’s Research Centre conducts around 100 vehicle teardowns each year to understand how new technologies affect repair methods and parts costs. A separate IAG-commissioned study, produced with Queensland University of Technology, estimated that more than 7,000 serious casualties could be prevented annually through consistent use of ADAS. The research was detailed in a recent analysis of how ADAS deactivation rates are undermining road safety outcomes.
Electric vehicles add a parallel challenge. The Federal Chamber of Automotive Industries reported that battery EVs accounted for 16.4% of new vehicle sales in April 2026.
IAG’s Changing Gears: Closing the Confidence Gap report found that consumer consideration of battery EVs has grown, but concerns around battery health, repair capability, and the availability of qualified repairers persist. For brokers, the gap between EV uptake and repair network readiness has direct implications for claims turnaround times and client expectations at renewal. Insurance Business has previously examined how Australia’s EV insurance challenge is growing as EVs hit 24% of new car sales.
Read more: Car insurance premiums: why motor claims costs keep climbing in Australia
The property findings sit against a record year for catastrophe losses. The ICA reported that insured losses from extreme weather reached $4.8 billion in 2025, up 727% on the prior year, across 294,000 claims.
A March 2026 hailstorm in Penrith in western Sydney generated more than 3,200 claims for IAG, including 2,305 motor claims. The insurer established a hail repair centre that assessed approximately 1,600 vehicles and completed 1,300 repairs between March 25 and August 3, 2026.
Following Severe Tropical Cyclone Narelle in Western Australia, IAG deployed assessors to Exmouth. In the wake of Ex-Tropical Cyclone Alfred, it completed more than 2,300 emergency make-safe repairs, provided 126 customers with temporary accommodation, and settled more than 3,400 food spoilage claims.
“By combining innovation with the expertise of our people and partners, we can continue to raise the standard of repair outcomes across our motor and property networks, to provide the best possible support we can for our customers, and ultimately, to make your world a safer place,” Gallagher said.
