Motor insurers' claims costs as a proportion of premiums collected rose from 89% in June 2019 to 94% in June 2024, according to the Insurance Council of Australia's motor insurance roadmap released in 2025 - a margin compression that persisted even as average premiums rose 42% over the same period. The ICA attributed the claims cost increase to higher expenses for vehicle replacement, parts and labour alongside the growing complexity and penetration of vehicle technology. Repair costs alone climbed 26% since 2022, with repair bills now comprising roughly 60% of total claim costs. That structural cost pressure is what sits behind the headline premium figures, and it falls hardest on the segments where claims frequency is highest.
New research from Compare the Market gives the young driver segment its specific current expression. Drivers holding a P1 provisional licence, typically aged 17, face average premiums of $3,897 - the highest of any age group, $580 more than supervised 16-year-olds on a learner's licence and up to $1,200 more annually than other motorists. The research recorded an average drop of approximately $1,000 for 18-year-olds holding a P2 licence, with premiums declining steadily from there until age 64 before rising again to peak at age 99.
Separate CHOICE data covering drivers aged 25 and under found average premiums of $3,645 in Victoria and $3,300 in New South Wales, the two highest state figures, against $2,509 in Queensland and $2,058 in Tasmania, the lowest. The CHOICE averages draw on 27,396 quotes collected in January 2026.
The young driver segment carries a specific and growing underwriting concern beyond claims frequency. Data from comparison site iSelect and the ICA found that approximately 6.8% of surveyed drivers admitted to providing false information during the application process to reduce premiums, with 15.4% of respondents aged 18-24 acknowledging the practice - more than twice the overall rate. The most frequently misrepresented details were parking locations, annual kilometres travelled and vehicle usage - precisely the variables most relevant to risk assessment in the segment carrying the highest claims exposure.
Adrian Bennett, general insurance lead at iSelect, said inaccurate disclosures carried specific policy consequences. "While it may be tempting to misrepresent details such as your car's parking location or annual mileage to lower insurance premiums, doing so can have serious consequences that may end up costing you more in the future," he said, noting that inaccurate disclosures could lead to claim rejections or policy cancellations.
For insurers writing young driver business, the disclosure data adds a claims validation dimension to a segment already running at elevated loss ratios. A policy written on misrepresented parking location or mileage creates the conditions for a disputed claim at precisely the point where claims frequency is highest - compounding the margin pressure the ICA data documents at the portfolio level.
Compare the Market economic director David Koch noted that different insurers carry different risk appetites for higher-risk segments, and that significant premium variation exists within the P1 cohort. The research identified a $1,219 difference between quoted premiums for a 17-year-old P-plater, a spread that reflects genuine underwriting differentiation rather than uniform market pricing.
The findings drew on quotes for a 2026 Toyota Corolla Ascent Sport Hybrid hatchback, taken on May 21, 2026, with a next-day commencement date.
